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Craft distillers to benefit from Kentucky Bourbon barrel tax bill

Craft distillers could benefit from a new piece of legislation that gives relief to taxes imposed each year on ageing Bourbon barrels in Kentucky.

The Kentucky Distillers Association “applauded” the decision to levy taxes on ageing Bourbon barrels

House Bill 445 is a Bourbon barrel tax reinvestment credit that offers distilleries a corporate income tax credit against the amount of barrel taxes paid, providing the money is reinvested into their work in Kentucky.

The Kentucky Distillers’ Association (KDA) “applauded” the decision on Monday night, stating the move would attract more craft distillers to start up in the state rather than locating elsewhere where the tax does not exist.

“This reinvestment tax credit will allow our distilleries to create more jobs and increase investment in the state,” said Eric Gregory, KDA president. “Plus, it will help us attract more craft distilleries and strengthen Kentucky’s rightful place as the one, true and authentic home for Bourbon and the Kentucky Bourbon Trail experience.

“We are appreciative that the General Assembly recognizes our signature Bourbon industry as a major economic development engine of the Commonwealth. We thank the legislature for its hard work and partnership.”

Local barrel taxes help support critical needs in education, health care, libraries and public safety.

However, the bill will not affect the funding that goes towards these causes, it will merely allow a tax credit against barrel taxes paid by the distilleries, which amounts to approximately US$13 million a year.

The KDA first filed for the measure on 2010 and has been raising the profile and support of its passage every year since.

“Right now, Kentucky produces 95 percent of the world’s Bourbon,” Gregory explained. “But as these start-up distilleries grow, that number might slide to 90 percent or lower. Imagine the impact on Kentucky’s economy if we begin to lose our historic monopoly.

“That’s why this bill is one of the most historic and monumental achievements for our legendary industry and it will provide benefits to generations of Kentuckians for years to come.”

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