Journal-Times (Grayson, KY)

October 10, 2012

Drink it or not, bourbon is important to Kentucky


Oct. 10, 2012 — Kentucky Agriculture Commissioner James Comer issued a press release this week to brag about the “Kentucky Proud” branded products that would be provided to about 900 news media staff members coming to Danville to cover the vice presidential debate.

Among the “agricultural” products on Comer’s list was bourbon whiskey, the state’s second best known food or drink export behind Kentucky Fried Chicken.

No doubt some folks will criticize Comer for even mentioning that our press visitors will get free whiskey as a Kentucky keepsake.

In our opinion, the commissioner is correct in his marketing efforts because bourbon is a proud example of Kentucky craftsmanship and tradition that's recognized worldwide.

It has become a signature industry that generates 10,000 jobs in Kentucky and dumps hundreds of millions of dollars in operating costs into our state’s economy.

More importantly in these tough economic times, bourbon is a thriving, growing, industry. In fact, distillery growth has added six percent of all new jobs in the last 10 years at a time the state lost 19 percent of its manufacturing jobs.

Nearly $100 million was invested last year alone in new distillery operations, bottling lines, warehouses, and visitor's centers.

This may come as a surprise but bourbon is perhaps the most heavily taxed industries in Kentucky, with nearly 60 percent of the retail cost of every bottle going to taxes.

There are seven different taxes on every bottle of bourbon, which generate more than $125 million every year from spirits production and consumption.

About $12 million of that total came from the ad valorem property tax that's assessed on aging bourbon barrels in Kentucky warehouses.

This is a tax that no other alcohol manufacturer pays in the United States or anywhere in the world.

Unlike other spirits, bourbon takes years to age before it can be consumed. A few top brands are aged as long as 12 years in a wooden barrel.

Those barrels of bourbon are taxed at the local and state levels each year after year after year. The distilleries have proposed but the General Assembly has yet to agree to let them have a corporate income tax credit to offset the amount of ad valorem taxes paid each year.

In turn, distilleries would be required to reinvest that credit in their Kentucky operations, creating more local jobs.

After all, giving relief on the barrel tax still leaves us six other taxes to collect on that unique beverage which was born here in the Bluegrass State.