By Cameron Smith
We don’t need the Alcoholic Beverage Control Board (ABC) in Alabama. It’s a bureaucratic dinosaur waiting for its extinction-level event. Now, the ABC has done the dirty work of raising taxes for the Alabama Legislature and Governor Kay Ivey.
The ABC approved a 5 percent “markup” on liquor on June 14, 2017. The measure is expected to raise $8.2 million next year. The Alabama legislature conditionally earmarked $6 million of the increase for district attorneys and $2.2 million for the Unified Judicial System.
Don’t believe for a minute this is a routine action by the ABC.
Over the last several decades, two of Alabama’s 67 counties–Marshall and Calhoun–successfully passed “local bills” imposing a 5 percent tax on liquor above the fees and taxes collected by the ABC and the state. Many other counties have tried to pass similar measures and failed.
The ABC suddenly believes the relatively insignificant price disparity on a bottle of liquor in Alabama is a problem worth addressing.
“The change in mark-up will keep the price of a bottle (except in Calhoun and Marshall counties) basically the same everywhere in Alabama, and negates the need for the local sales tax bills,” wrote ABC Board spokesman Dean Argo.
Let me parse out that logic. In the name of price equity, the ABC suggests it alleviated a need to raise taxes in 65 of Alabama’s counties by raising taxes administratively in every county. First, if there’s a need to raise taxes for a specific purpose, it simply isn’t the ABC’s job. Second, price equity isn’t a real issue. If Marshall and Calhoun counties were concerned about it, they shouldn’t have raised taxes in the first place. Finally, the ABC “solution” didn’t actually address the existing price differences. There’s so much wrong with the ABC’s logic that it should make your head spin.
Argo also noted, “ABC Board staff did not ask legislators to “earmark” [revenues for district attorneys].”
That might be technically true, but it’s clear the ABC worked with the legislature, the district attorneys and others to develop the plan.
The markup has absolutely nothing to do with alcohol. More importantly, it doesn’t clearly fit into one of the four rationales for markups noted in the ABC’s administrative code.
In addition to ABC executive director Mac Gipson, all three of the ABC board members are Robert Bentley appointees. Their apparent willingness to raise taxes looks like something right out of our former governor’s playbook. All three board members are holdovers whose terms expired on April 12, 2016.
We ought to support law enforcement. The majority of Alabama’s voters don’t want to raise taxes, but funding the district attorneys is as good of a reason to consider it as any.
The legislature clearly didn’t want to vote on a tax hike–even a relatively small one. Rather than explaining the need for a small tax hike, they hid behind the ABC. Governor Ivey could have replaced the Bentley-appointed board or pressured them to reject the “markup.” She did neither. The legislature and Governor Ivey simply passed the bottle to the ABC to avoid accountability. We shouldn’t let them get away with it.
Cameron Smith is a regular columnist for AL.com and vice president for the R Street Institute, a think tank in Washington, D.C.