Some Retailers Worried About Tax Increases

by Gabe Bullard on February 17, 2009

Starting April 1st, Kentuckians will pay sales tax on alcohol and thirty cents more for a pack cigarettes. The price increases have some retailers worried.

The six percent sales tax on alcohol comes on top of an 11 percent wholesale tax.

Gordon Jackson is co-owner of Old Town Wine and Spirits in Louisville. He thinks extending the sales tax to alcohol will push customers to Indiana, where there is no state wholesale tax, just a seven percent sales tax.

“It might drive some out of business,” he says. “It wouldn’t shock me if there were a large retailer to open up in Indiana.”

Lawmakers also approved a thirty cent per pack cigarette tax increase. Jackson isn’t worried about that increase driving away customers.

“I don’t know if they’ll be happy about it, but they’ll pay it,” says Jackson. “That’s my hunch.”

The tax increases were passed in order to help state government deal with a $459 million budget shortfall.

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