Local public officials discuss their opposition of the removal of the barrel tax

Local public officials discuss their opposition of the removal of the barrel tax
Published: Feb. 27, 2023 at 11:15 PM EST
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LOUISVILLE, Ky. (WAVE) - Politicians, law enforcement, educators, and others met in Bardstown Monday night to talk about big money in bourbon barrel taxes.

There is a Kentucky state tax on bourbon that is being stored or aged in barrels. Some in the industry say if the tax isn’t removed, some distillers might move out of state.

But there is a lot of opposition.

Introduced last week, the bill aims to phase out the barrel tax by 2039. But school districts, fire departments, and other important industries say they depend on that money.

“We consider ourselves the bourbon capital of the world,” Nelson County Sheriff Ramon Pineiroa. “We love our bourbon. But if this tax goes away, a lot of things go away as well.”

High-ranking officials from several counties crammed into a small room in the Old Nelson County Courthouse. Judge Executives, mayors, superintendents, and more spoke about their opposition to House Bill 5.

“Our fire department has made 48 runs to the number one distillery in the world in just this last year,” Bullitt County Judge Executive Jerry Summers. “That fire department will go away if this tax goes away because it’s over 50% of their budget.”

According to many of the speakers, a fire department isn’t the only thing that would be lost.

“If these taxes go away, my office will lose 235,000 to $250,000,” Pineiroa said.

“Right now we currently rely on this tax to contribute about 3,000,000 dollars of our annual budget,” Bullitt County Superintendent Jesse Bacon said. “And that number has grown over the last several years.”

Marion County Judge Executive David Daugherty said the tax was the reason why they welcomed distilleries to come into their community.

“The tax is something that when we receive, we don’t have to raise people’s taxes,” Daugherty said. “We don’t have to things that aren’t good to do. That’s why we do what we do.”

Lebanon Mayor Gary Crenshaw said they’ve spent millions of dollars on economic development thanks to the tax.

“I’ve been blessed to be the mayor of Lebanon, Kentucky for 24 years,” Crenshaw said. “This issue is as important as any issue that I have ever seen in my career.”

The Kentucky Distillers’ Association’s website said that distilled spirits are the highest-taxed industry in Kentucky. It says the barrel tax puts Kentucky at a competitive disadvantage with other states.

But Senator Jimmy Higdon said the numbers suggest otherwise.

“Last year, we had 70 announcements, 70, of new distilleries coming to Kentucky,” Higdon said. “And 2.8 billion in investments. That’s a lot of money, that’s a lot of people. So the bourbon industry is alive and well.”

Kentucky Distillers’ Association President Eric Gregory released this statement about the bill:

“Eliminating the job-killing inventory tax on aging barrels requires consideration of the distilleries that pay it and the local communities that benefit from it.

Kentucky’s signature Bourbon industry believes the phase-out schedule in House Bill 5 ultimately benefits local communities across Kentucky by more than doubling the industry’s tax before any reduction occurs.

In fact, most local communities will see no reduction from current revenues for at least the next 10 years.

While the bill will initially and significantly increase our tax liability, we appreciate the leadership of A&R Chairman Jason Petrie and Speaker David Osborne to put forth a proposal to slowly phase out the discriminatory tax.

The success or failure of House Bill 5 will determine whether Kentucky’s distilling industry continues to call the Commonwealth home, bringing jobs and tax revenue as it grows, or whether it is forced to look at other states for future growth or even potentially relocating existing facilities.

Thank you to the legislature for addressing this crisis. It is imperative that the Kentucky General Assembly end the tax on a $9 billion homegrown industry that employs 22,500 Kentuckians and attracts millions of tourist visits to Kentucky each year.”