Restaurants, liquor stores worry new tax places burden on them

Published 9:04pm Thursday, May 9, 2013

Restaurant and small business owners are less than thrilled about a proposed piece of legislation, which if passed would create an additional five percent sales tax on liquor sold by entities licensed by the Alcoholic Beverage Control Board in Dallas County.

The tax, if enacted, would be collected and used to support the district attorney’s office and the Dallas County Drug Courts.

Mike Patel, owner of Johnny’s Package Store said he thought a five percent increase is too much.

“I’m not pleased very well, see, five percent is a big increase; people don’t mind paying one or two percent,” he said. “With two percent or three percent, they don’t much care, but five percent is a big increase. I get it’s for a good reason, but I think it would be more reasonable for both sides — for the consumer and for the [district attorney and Drug Courts].”

Patel’s store is outside the city of Selma said hist current sales tax is 7.75 percent, and if HB 571 passes, his sales tax on liquor would increase to 12.75 percent.

“I’m not actually opposing this thing. It’s for a good reason, so I’m not really opposing, but there are a couple of things we ought to discuss,” Patel said, noting he’d like to see if the tax could be reduced “to maybe two or three percent so people don’t have much burden.”

Bob Kelley, owner of the Tally Ho restaurant said he first noticed the proposed bill as a legal notice in the newspaper.

The notice was published in The Selma Times-Journal on March 19 and 26 and April 2 and 9.

Kelley said he is still unsure where the five percent sales tax will be collected and needed more details of the bill itself.

“I don’t know where the five percent is. Is that the sales price of a drink, is that the price at the liquor store — I don’t know,” Kelley said. “I wish I could do something about this, but I don’t even know what the rules are right now.”

Dianne Smitherman, owner of Side Porch Sandwiches, said she thinks the increase will affect not only her business, but any and all retail sellers of liquor. More importantly, she said the bill has some issues with the way it is written — noting that the ABC store will be excluded from the sales tax increase.

“The state store doesn’t charge what we charge; they charge six percent across the state,” Smitherman said, noting Selma city sales tax rate is 10 percent with four percent going to the state, 4.5 to the city and 1.5 to the county.

With an additional five percent sales tax, stores selling liquor within the city of Selma will increase to have a sales tax of 15 percent.

“The state store only charges six percent, so ‘Joe Citizen’ goes to the state store and is charged six percent; they go to a local package store and is charged 15 percent. It will affect their businesses greatly,” Smitherman said. “Fifteen percent versus six percent is a huge difference.”

Bob Hill, general council for the ABC Board said the law sets sales tax for the ABC stores uniformly across the state.

“So this sales tax for Dallas County would not effect the ABC Store,” Hill said.

“I’m mostly concerned about the way the bill is written and whether or not it conforms to Alabama law, and I believe that Dallas County, with their dire economic situation shouldn’t be burdened with this and these small business owners shouldn’t be burdened with this,” Smitherman said.

HB571 passed in the House and is currently in the Senate Legislative Committee.


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