Its All About Taxes

After hearing the unending rant that liquor stores would be great for the local economy with all the taxes they would generate, appears Loudon officials are about to give away a chunk of those taxes. Remember how we were told how foolish we were to be letting all that tax revenue go to other counties?

Now some of those same folks who didn't want us to lose those tax revenues to other counties apparently just want us to lose the revenue all together. The reality of big tax revenues coming from liquor stores isn't really as big as some would have us to believe. The only real revenue comes from what's known as "inspection fees." It's not really an inspection fee at all but just an additional tax added to those who sell liquor by the jug. Local jurisdictions may impose the "inspection fees" if they want for up to 8% on the inventory in a liquor store. Most all other surrounding jurisdictions that have liquor stores impose the 8% tax. So did Loudon, but seems that's about to change.

According to the story below, the two Loudon liquor store owners have asked city officials to reduce the "inspection fees" from the current 8% down to 5% arguing that the 8% is was making it hard for them to compete with surrounding county liquor stores.

Loudon's two liquor store owners were back before the Loudon City Council Monday, requesting a reduction in inspection fees established by the ordinance adopted late in January. After discussion, council members voted to amend the ordinance on first reading, to reduce the fee amount as requested.

Johnny James, owner of Seventy-two Wine and Spirits, located in the Centre 75 shopping center, and Jim Purdy, owner of The Grove Wine and Spirits, located downtown on Grove Street, said surrounding communities with liquor ordinances have dropped their inspection fees from 8 percent to 5 percent, making it difficult for the local liquor store owners to compete.

Purdy said customers are driving to surrounding counties. "Why handicap us against Knox County and Blount County?" he said. "I've been hearing this as long as I have been open. They want to know why they are paying more, and people from Tellico Village are driving to Knoxville."

James concurred. "People who buy by cases are when it comes into play - with those who buy in quantity. ... I ran across this especially at the Village, and I heard a little from Sweetwater and Athens," he said. "I never realized people were so price conscious."

Mayor Bernie "Inky" Swiney said he felt the requested change was warranted. "The business climate is tough enough," Swiney said. "We don't want to make it tougher."

Councilman Lewis "Charlie Brown" Garner asked about the budgeted revenues. "Won't this cause us to have a budget deficit? I thought the whole thing about us approving the liquor was going to be the revenues."

James said the initial inventory purchase, to stock the two stores, the largest windfall of funds, had been collected by the city already.

He argued that increased sales volume would make up the difference in the fee reduction. "Would you rather have 8 percent of $1 million, or 5 percent of $2 million?" he asked.

State law allows for an inspection fee of up to 8 percent to be levied on licensees. The fee is applied to the gross purchase price of all alcoholic beverages, and must be transferred to the city recorder by the 20th of each month.

Lynn Mills, city manager, said the inspection fee had been collected for two months, and garnered revenues of $6,500 for the month of July and $ 5,285 for August. The inspection fee is levied to help municipalities oversee operations and compliance of liquor stores, such as audits or inspections, Mills said.

A motion was made by Councilman Michael Cartwright to reduce the 8 percent inspection fee to 5 percent. The motion was seconded by Councilman Lynn Millsaps. On a roll call vote, only Garner voted "no," in opposition to the amendment.

A public hearing is scheduled for 7:10 p.m. Monday, Oct. 19.