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Kentucky bourbon barrel tax phase-out still up for consideration

Stu Johnson

The future of the Kentucky bourbon barrel tax lies in the hands of state senators in Frankfort. The state House approved legislation to phase out the tax based on the assessed value of barrels stored in warehouses. Eric Gregory is president of the Kentucky Distillers’ Association. He said the tax would be phased down over 17 years, but that wouldn’t start until 2026.

“It gives counties and fire departments and other people and groups that depend on this money a long runway to diversify their budgets,” said Gregory.

Gregory said that would allow for other taxes to help ease the transition away from the barrel tax.

Gregory noted other states are adding more new distilleries than Kentucky, although the Commonwealth still produces 95% of all bourbon. And the KDA leader added the high popularity of bourbon is not a sure thing for years to come.

Marion County Judge Executive David Daugherty is concerned that the revenue lost over time could impact school funding. He said the loss of bourbon industry money might be made up with taxes from citizens. Daugherty also said it’s easier for lawmakers in counties with no bourbon warehouses to vote to phase out the levy.

“They’re selling that to these other senators and representatives from other areas that don’t have a barrel house in their communities,” said Daugherty.

Senate President Robert Stivers said last week there had been meetings of various organizations regarding the legislation. He said it’s a measure that could still be considered when lawmakers return to Frankfort to consider vetoes by the governor.

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Stu has been reporting for WEKU for more than 30 years.
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