‘Corporate Greed’: Bourbon Tax Bill Phase-Out Leaves a Community Divided
Kentucky’s Bourbon Tax is set to be phased out by 2043. (Photo: AP Photo/Ed Reinke)
An initiative to gradually phase out Kentucky’s Bourbon Tax by 2043 has led to division among distillers, local politicians and constituents alike, according to an article released Monday in The Spirits Business.
The legislation measure, dubbed House Bill 5, according to Kentucky news outlet WHAS11, implements a variety of tax cuts on Kentucky’s bourbon industry. Historically, Kentucky distillers had to pay a form of “property tax” at a value typically set at $200 per barrel. These funds are allocated for local infrastructure, schools and EMS services. Once the bourbon tax is phased out, constituents may have to make up the difference, leading to potentially negative impacts on local communities.
“This is a tax cut for a booming industry,” said Republican Rep. Candy Massaroni of Bardstown, according to The Spirits Business. “And ultimately, this is going to put more of a tax burden upon my constituents.”
The bill is widely supported by the Kentucky Distiller’s Association. The association views the bourbon barrel tax as “punitive” and believes it will drive fledgling distillers away from setting up shop in the Bluegrass State.
“It has become painfully clear that the barrel tax is turning away new distilleries from Kentucky and sending them to competitor states,” President of the Kentucky Distiller’s Association, Eric Gregory quipped.
In addition to phasing out the bourbon barrel tax, HB5 creates a tax exemption for the bourbon industry, excluding social media marketing from taxation according to WHAS11.
The bourbon barrel tax is completely unique in the sense that Kentucky is the only state that implements it.
“Importantly, for Kentucky, the bourbon tax is the only type in the world like this,” said Jim Waters, CEO of the Bluegrass Institute for Public Policy Solution to WHAS11. “It’s a barrier. It’s anti-growth, anti-competitive tax.”
In 2022, 40 counties in the state of Kentucky received a portion of the $40 million in tax revenue collected that year. $26 million went to local school districts, and $720,000 went to emergency services, according to WHAS11. When the tax is phased out, these counties will have to find other ways to get that funding.
“We’ve been their biggest advocates and they threw us under the bus,” said former Jim Beam executive Jerry Summers, according to The Spirits Business. “Our industry was always a handshake agreement. Where you have an alcohol-based plant that produces hazardous material, you need Emergency Management, EMS, [and] a sheriff’s department.”
Summers now serves as a judge-executive for Bullitt County in Kentucky.
This latest measure is stoking the flames of division between distilleries and the local communities they serve in the area. Many local officials feel community support was vital to the growth of Kentucky’s bourbon industry which is now worth a cool $9 billion.
“Greed. That’s my number one opinion. I think it’s corporate greed,” Republican Nelson County Judge Executive Tim Hutchins told WHAS11.
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