Ever since the Kentucky General Assembly approved a new 6 percent sales tax on alcohol last month, Torry Lemp had made a mental note to go on a liquor run before the levy takes effect April 1.
So Lemp and his brother Terry, who was visiting from Florida, spent part of Sunday afternoon at the Beaumont Centre Liquor Barn in Lexington filling a cart with bottles of wine, vodka and tequila to save a few bucks before Wednesday.
"That's why we're here. Last time I was in here, I thought 'I have to be back here before the tax kicks in on the first,'" Torry Lemp said.
Even if Liquor Barn customers didn't know the new tax is coming when they walked into the store, it was hard to miss the dozens of fluorescent tags taped below bottles of wine, liquor and packs of beer.
Liquor Barn's "Beat the tax" tags outlined how much each bottle will cost at the register before April 1 and what it will be afterward.
One tag underneath a 1.75 liter bottle of Tanqueray Vodka noted: "Today you pay $35.29. April 1 you pay $37.40."
"That was my idea," Liquor Barn president Roger Leasor said of the tags. "And we're seeing some response from it. It's not huge but it's building."
Leasor said the Lexington area Liquor Barn stores might stay open beyond their normal 10 p.m. closing time Tuesday in case of a last-minute rush as consumers try to stock up before the tax takes effect.
Currently, liquor, wine and beer sold in Kentucky stores are taxed only on the wholesale level, so the tax is built into the price. However, bottles or drafts sold in restaurants and bars do have sales tax applied.
The legislature approved tacking on the 6 percent sales tax — the same level applied to products other than food and medicine — as part of a package of measures to plug an expected $456 million hole in the state budget this fiscal year, which ends June 30.
In addition to the alcohol sales tax, lawmakers raised the cigarette tax 30 cents per pack and shifted some government funds around.
Gov. Steve Beshear also is imposing 4 percent cuts to state agencies and 2 percent to universities, although the budget reductions would have been broader and deeper without the cigarette and alcohol taxes. The income from those increases will raise $52 million by July 1 and more than three times that in fiscal year 2010.
Pre-party boost expected
"I think they've got to tax something. They might as well tax booze and cigarettes," said James Mischka, who lives in Lexington on the weekends and was browsing for Seagrams vodka Sunday.
Mischka said he didn't know about the new tax until he came into Liquor Barn Sunday. But he said he didn't think it would deter him from buying alcohol.
Leasor, Liquor Barn's president, said he estimated about 30 percent of the stores' customers don't know that they haven't had to pay sales tax at the register on beer or liquor until the levy approved by the legislature. Now that the tax increase has generated publicity, he said, he's expecting many people with upcoming events, such as weddings or Kentucky Derby parties, to buy their booze in the next two days.
One customer at Shoppers Village Liquors near Chevy Chase spent $639 Sunday afternoon to buy five boxes of liquor, including two cases of bourbon and a case of vodka for his mother, said clerk Shelby McCuddy.
That saved him $38 he would have paid in sales tax after April 1.
"People are taking moderate advantage of it and that will build toward Tuesday," said Leasor, whose company also owns Shoppers Village. "It'll be interesting to see what happens in April. I don't know what to expect. But I don't think it will change people's habits in the long run."
Cigarette tax a bigger hit
Josh Talbert of Lexington said the tax might hurt more this summer when he and his wife throw some barbecues. The big financial hit for the Talbert household will be the cigarette tax increase, coupled with a 62-cent federal cigarette tax increase, he said. But he hoped his wife, who smoked a pack a day before becoming pregnant, will use the 92 cents per pack jump in taxes as motivation to quit.
Torry Lemp said Sunday marked his second day being cigarette-free, although he admitted to chomping on cigars to help ween him off a habit he's had for 32 of his 46 years.
That, he said, might be the best result of all the tax increases.
"I can't afford to smoke anymore," he said. "It's time to quit anyway for my health. I want to live a lot longer."
Reach Ryan Alessi at (859) 231-1303.