Kentucky Distillers Association wants Bourbon tax repeal

Kentucky Distillers' Association wants Bourbon tax repeal

Bourbon distillers, including Brown-Forman and Beam Global Spirits & Wine, have criticised tax laws in the US state of Kentucky for putting Bourbon at a competitive disadvantage to vodka and Scotch whisky.

The Kentucky Distillers' Association (KDA) has called for local politicians to support a bill that would significantly reduce the tax burden on Bourbon producers in the state. Around 95% of Bourbon is produced in Kentucky.

Bourbon sales have risen strongly in key export markets over the last five years, but producers are unhappy at Kentucky's ad valorem tax - a so-called 'barrel tax' - which cost the industry US$12m in 2010.

"That puts our distillers at a competitive disadvantage in the global spirits marketplace," said representatives of the KDA, including its chairman, Chris Morris, who is master distiller at Brown-Forman. "It's a tax that no other alcohol manufacturer pays in the US or around the world," said the representatives, who also include Diageo's director of operations in North America, Andrea Wilson, and Beam Global's director of operations for the Americas, Jeff Conder.

In a leader article in the Lexington Herald, they gave their support to Bill 418, which is currently under scrutiny in Kentucky's House Appropriations and Revenue Committee. The bill would nullify the barrel tax by installing tax credits for the state's Bourbon distillers.

Kentucky's Bourbon sector employs 10,000 people. According to the KDA, there is currently $100m being invested in Bourbon operations and tourism. Visitors to the Kentucky Bourbon Trail quadrupled in 2010, to 9,000.