Governor Kay Ivey has signed into law legislation increasing the state sales tax on alcohol sold in ABC stores.

Senate Bill 309 by Senate Majority Leader Steve Livingston (R-Scottsboro) changes the additional state sales tax rate on the sale of alcoholic beverages sold at retail by ABC stores from 2%, under current law, to the combined county and municipal general sales tax rates levied or assessed in the county or municipality where the transaction occurs. 

According to the Department of Revenue, the combined average of the county and municipality tax rates is 5.33%. Based on a legislative fiscal note, the bill will increase revenue to county governments by an estimated $5.1 million and municipalities by an estimated $6.7 million.

The law goes into effect on October 1. Proponents of the measure have said the tax change levels the playing field between state-owned ABC stores and private stores that already have to charge county and municipal taxes. Opponents have said the tax increase will lead to higher prices for consumers at ABC stores.

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