Several Ky. counties raise concerns over bourbon industry tax bill

A proposed tax break to the bourbon industry is raising concern for several communities who say the cuts would strain their budgets.
Published: Feb. 27, 2023 at 10:24 PM EST
Email This Link
Share on Pinterest
Share on LinkedIn

BARDSTOWN, Ky. (WKYT) -The bourbon industry in Kentucky has led to great financial gains for the Commonwealth, especially in areas where there are distilleries, and tourist stops. However, a proposed tax break to the industry is raising concern for several communities who say the cuts would strain their budgets.

Kentucky’s bourbon trail is a tourist destination in the bourbon capital of the world—an estimated $9 billion industry.

Distilleries in Nelson, Franklin, Bullitt and other counties have become a key source of funding for communities. Leaders say the property taxes the businesses pay are critical to these cities and counties.

“If these taxes go away, my office will lose $235,000 to $250,000. That is out of my budget,” said Nelson County Sheriff Roman Pineiroa. “To put it into perspective, another sheriff said we will lose our night shift coverage.”

Monday, leaders from several counties came together to speak against Kentucky House Bill 5, filed by Republican Jason Petrie and co-sponsored by House Speaker David Osborne. The bill phases out the property taxes the distilleries pay the counties starting in 2026 and completely by 2039.

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

Osborne told the Herald-Leader last week the tax is a job killer, saying companies would move jobs to other states if the tax stays.

Just last year, Kentucky recorded a record year for growth in the industry, with 2.1 billion dollars in investments. It’s why opponents are standing against this, saying there’s no strain on the industry.

“If this was something that was really killing them, like what was happening back in the 80s when bourbon was out of favor, I could see the need. But I just don’t see it at this time,” Bardstown Mayor J. Richard Heaton. “It’s not the hindrance that the sponsors of this bill would have us believe.”

Speaker Osborne told the Herald-Leader he expects the bill to move through quickly.

Right now, there are distilleries in 1/3 of Kentucky counties, and that is expected to increase and generate more than 22,500 jobs.

Monday night, the Kentucky Distillers’ Association released a statement saying:

“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.”