Did you know that Kentucky’s dry counties benefit financially from alcohol sales throughout the state? For more than 30 years, most of the taxes collected on alcohol sales, no matter where they originate, have gone into the state’s General Fund for statewide use. And while more than 30 percent of Kentucky’s counties don’t contribute alcohol sales tax to the General Fund, they still have access to that money.
Wet or Dry Is Not Cut and Dry
Kentucky’s blue laws are complicated and tenacious, with the decision to allow alcohol sales left to local vote. Out of 120 counties, 38 are entirely dry – no alcohol sales, no exceptions. Only 32 are wet. The rest are a mixed bag. There are moist counties, where alcohol sales are allowed in certain parts of the county (like in town as opposed to the outskirts). There are special concessions for alcohol sales at restaurants of a certain size, golf courses, wineries and certain kinds of historical sites, too, so even if a county is mostly dry, you still might be able to buy a drink if you know where to go.
State law even allows the right of city precincts in a wet area to vote for separate dry status (like if Pleasure Ridge Park went dry, even if the city surrounding it was not), so the possibility exists for subdivisions even from within each county.
The High Cost of Doing Business
What kind of money are we talking? For starters, an alcohol sales tax of 11 percent. Then add on various excise taxes (example: $2.50 per 31-gallon barrel of beer) applied to the retail price of alcohol. For example, a four-pack of Founder’s Breakfast Stout carries a price tag of about $10.99. A portion of that listed retail price includes the pre-existing excise tax. Then add 11 percent (about $1.21) sales tax, for a final bill of $12.20.
Those tax rates are high. According to the Center for Science in the Public Interest, Kentucky is tied for fourth in ranking as most the most taxed state. The Courier-Journal noted in 2012 that a study by University of Louisville economist Paul Coomes ranks Kentucky highest among states in taxes on wine, second-highest in taxes on distilled spirits and tenth-highest on beer (among states that don’t sell spirits at state stores).
To be fair, the General Fund comes from numerous sources, ranging from alcohol sales tax to taxes imposed on bigger businesses. The difference, however, is that while small-town Kentucky may not have an industry titan pumping much needed revenue into the area, it’s probably not because local voters decided to prohibit that business from opening. Even in the driest county, you can legally open a Ford Plant, but not a Buffalo Trace distillery.
So not only does our state have a higher alcohol sales tax, but this tax burden falls on a proportionally small segment of the population.
Kentucky’s Alcohol Sales Tax: ‘Confusing at Best’
And the complexities of Kentucky alcohol taxes seem as unending and archaic – if not outright anachronistic – as the laws they are based on.
The Kentucky Alcohol and Beverage Control (ABC) website can get a little confusing. But the ABC is only the enforcing arm of Kentucky’s alcohol laws. To study the tax laws, you have to look to the Department of Revenue. But even after reading up on the statutes, I was still left with questions that I had to field to individuals who work in these Frankfort bureaus. But where can the average citizen learn specifics about alcohol-related laws in Kentucky, tax-related or otherwise?
Unfortunately, neither Kentucky’s legislative website nor the ABC website offered clear answers. In fact, in every case and on every website, I was only able to find information when I had the specific keyword to search. The more you research this, the more complicated it becomes. You can only complete any narrative here by going on to read KRS 211.285, which in turn similarly references other statutes, ad infinitum (or at least close enough to feel that way). Is the story so vast that we can’t possibly fathom the scope, or are we just not being let in on the big picture?
In a 1985 ruling, Justice Charles M. Leibson describes state laws on alcohol sales tax as a maze of obscure statutory language that he identifies as “confusing at best.” If local lawmakers have difficulty explaining these laws, how can the layperson explain and understand them?
Even Governor Steve Beshear wants to organize some kind of reform in this system, and has acknowledged just how difficult this subject is to understand.
This piece originally appeared in The Louisville Lip. Syd Bishop writes for LEO, Never Nervous, and Al Da, and is the guitarist/keyboard player for Visiting Nurse. He prefers craft beer or Old Weller 107