A Liquid Market: Newly Wet Counties See Modest Tax Growth

by Kate Knable  on Monday, Oct. 8, 2012 12:00 am  

Rodney Hurst, right, and Mitch Pennington own Little Mo's Liquor Store in Gurdon, one of the four package liquor stores permitted in Clark County since voters there decided to "go wet" two years ago. (Photo by Michael Pirnique)

Mark Hughes of Ship ’n Shore Liquor Mart in Garland County predicted two years ago that Clark County’s going “wet” would put him out of business.  

“This right here will probably be what puts the fork in me,” Hughes told Arkansas Business after the Nov. 2, 2010, vote legalized liquor sales in Clark County.

Well, he’s out of business.

Arkansas’ Alcoholic Beverage Control Division suspended Ship ’n Shore’s liquor permit on Feb. 17 after the store defaulted on a payment plan for back sales taxes. Ship ’n Shore, which for more than 25 years was the “first chance” liquor store closest to the Clark County seat, Arkadelphia, has been closed ever since.

Boone County also legalized liquor sales during the 2010 election, and Benton County voters will have the chance to switch from dry to wet on Nov. 6. (Click here for a related story on the Benton County election.)

The Arkansas Department of Finance & Administration doesn’t track the taxes collected on liquor sales by county.

However, the rise in sales and use tax collections in Clark and Boone counties since they legalized alcohol sales supports the arguments of those who backed changing the law: Permitting alcohol sales contributes to economic growth — though the effect appears modest.

Clark and Boone counties were legally wet in 2010 as soon as their election results were certified, and stores and restaurants began selling beer and small farm wine in January 2011, according to Michael Langley, director of Alcoholic Beverage Control.

The ABC board approved the counties’ first liquor permits in August 2011, and the first liquor stores opened within days, Langley said.

Boone County’s sales and use tax collections were $6.11 million in 2010 and $6.53 million in 2011, a year-over-year increase of 6.9 percent. County sales tax collections for January through July of 2012 were $3.8 million, up 2.7 percent from the same period in 2011.

Clark collected $4.21 million in sales taxes in 2010 and $4.43 million in 2011, which is growth of 5.2 percent. The county’s sales tax collections for the first seven months of 2012 were $2.64 million, up 4.4 percent from the same period last year.

Despite the fate of the family-owned Ship ‘n Shore, Clark County’s four new liquor stores haven’t harmed neighboring Garland County’s overall economy, according to County Judge Rick Davis. “I don’t think it’s bothered us a bit,” he said.

 

 

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