House Bill 612, introduced in the Kentucky General Assembly in February, proposes a controversial 4% state retail regulatory license fee on all alcoholic beverage sales to consumers by retailers.
The current tax on alcohol sales in Kentucky is 6%. If passed, this bill would raise the sales tax to 10%.
Restaurants, bars and liquor stores are now searching for answers to keep their sales flowing should the measure pass.
This legislation could impact their day-to-day operations..
“I would imagine this would make folks drink less at restaurants,” said Jordan Stephenson, owner and manager of Bard’s Burgers.
He said this bill could cause the usual steady flow of customers to decrease. Restaurants would need to increase prices to stay competitive.
“We would need to offset the tax and rising cost with a small price bump,” Stephenson said.
Critics say the measure would be a crisis in the already demanding restaurant industry.
“[It] is crazy tough post COVID, and this would make it more challenging,” Stephenson said.
The idea of HB 612 is very puzzling to him.
“I first heard of the idea maybe six weeks ago and thought it was a horrible idea,” Stephenson said.
He, like many restaurant owners, is worried.
“It concerns me because I do believe it would cause everyone’s sales to drop a bit and potentially be the nail in the coffin for some places,” he said.
The impact could also be felt in liquor stores.
“We would lower the prices to make it the same to combat the fee,” said Nikki Harkenreader, manager of the Kroger liquor department.
She said customer backlash could significantly damage business and reduce sales as negative reactions drive customers away, but she remains confident that regulars will help keep them in business.
“The amount of anger we would have to deal with from customers as a result,” Harkenreader said, “the sales would probably go down, but not terribly, because we have good regulars.”
The ultimate concern is how consumer behavior may change if the measure is passed. The effects of House Bill 612 will be felt across all stores, and managers are hoping small price discrepancies won’t deter customers from buying, but Harkenreader isn’t confident.
“They are less likely to buy because it doesn’t match the price on the tag”, she said.