This story is a part of Ask Alabama, where you ask the questions, you vote to decide which questions we answer, and then we investigate.
This week we're answering a question submitted by a reader from just outside Dothan who asked:
How much tax money does Alabama lose to neighboring states due to the higher prices of alcohol here?
It's true, Alabama does have far higher taxes on alcohol than in neighboring states, meaning that alcohol is likely more expensive too.
Our question asker, who wanted to remain anonymous, told Ask Alabama that the whisky he regularly buys is 55 to 40 percent cheaper in Florida and he knows of private companies and government agencies that go to different states to buy large amounts of cheaper booze for various events.
"The ABC Board presented an argument a few years ago showing comparative prices for different liquor brands that were very close to what Alabama charges," said the question asker in a conversation with Ask Alabama. "The only problem was the brands they provided for price comparison no one had heard of them and they didn't even sell them in their stores."
"They know they charge way more than most other states."
But working out how much Alabama loses in tax revenue to neighboring states is almost impossible to calculate without knowing how many people are actually crossing state lines to do it and what they are buying.
One insight into what Alabama makes is its overall tax revenues from alcohol sales.
Alabama ranks in the top five of states in terms of tax raised per gallon of alcohol sold, according to a 2014 Tax Foundation report. Alabama raised roughly $18.23 per gallon compared with Louisiana at $2.50 per gallon, which ranks 43 in the country. At the same time the Yellowhammer state ranks in the bottom 10 for alcohol consumption, according to a study by the National Institute of Alcohol Abuse and Alcoholism (NIAAA).
If Alabama lowered it taxes, which in turn made alcohol cheaper, that would possibly keep people buying alcohol in state, but there would less tax revenue collected per gallon. So, in the end, the total amount of money raised might turn out quite similar. However, it's hard to say without actually trying it.
But given that less alcohol is apparently being consumed in state, that's good news for Alabama's conservative and religious right, which likes the idea of big tax revenues and lower consumption.
"The idea is that if you look at the data, Alabama ranks among the highest in revenue from the sale of spirits, hard liquor," said Joe Godfrey, Chief Executive of the Alabama Citizen's Action Program, an interdenominational ministry group based in Birmingham, who spoke to Ask Alabama about a similar issue back in June 2017. "But that's not my biggest concern; it also ranks among the lowest in consumption - that's what I care about."
But that low consumption rate, which seems hard to believe if you've been out in Mobile on a weekend, might be because people are actually buying a lot of their alcohol in neighboring states, making it harder to keep track of whose drinking what. But again, that is anecdotal and difficult to quantify.
"Even if the state did lower the prices and we bought more, those ABC stores are overstaffed," said the question asker. "What are we losing there, what are we losing on renting those ABC stores?"
Those questions relate to the ongoing battle between those in Montgomery who would like to see the State move out of the alcohol business and those that want it to stay in.
"I think that we would see a decrease in revenues to start with for a couple of years but in time that would absolutely increase and go above current levels," said Senator Dick Brewbaker during an interview with AL.com.
However, the status quo is being kept in place by an almighty and unlikely alliance.
"We're still in the liquor selling business because of a coalition between the ABC and the religious right And the religious right believes very firmly that if it was privatized there would be more liquor sold and they think that's bad," Brewbaker added.
Alabama recently approved a new 5 percent tax hike on alcohol that will see the state bring in an additional $8.2 million in revenue during the next budget year. The money will go toward state district attorneys and the state's court system, which has seen funds reduced in recent years. Representatives of the district attorneys and the court system say the distribution is fair given that both entities spend most time dealing with alcohol related crimes.
So the answer is that we don't really know for sure how much Alabama is losing to neighboring states, but it can't be too bad given the amount the state raises in tax revenue from liquor sales.
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