Bourbon put on ‘level playing field’ with new bill

Kentucky’s Bourbon producers will “no longer be at a disadvantage with their global competitors” after two senators introduced a new piece of legislation to “correct” a tax code provision.

The Distilled (Aged) Spirits Act has been welcomed by Kentucky’s Bourbon industry

Senators Mitch McConnell and Rand Paul have introduced the Advancing Growth in the Economy through Distilled (Aged) Spirits Act, allowing deduction of interest expense related to Bourbon inventories in the year it is paid.

Under current law, Bourbon and whiskey producers in the US cannot deduct interest until the product is sold, which could be as long as 23 years after a lengthy aging process.

In the UK, all spirit producers are permitted to deduct interest expense the year it is capitalised.

The lawmakers claim the piece of legislation will provide a boost to Kentucky’s economy and help create jobs.

“Kentucky produces 95% of the world’s Bourbon supply,” senator McConnell said. “Over 15,000 jobs in Kentucky are attributed to the Bourbon industry and it brings in billions of dollars to our state’s economy.

“This legislation will not only put Kentucky’s Bourbon industry on a level playing field with its competitors, but it is a pro-growth measure that will also help provide a boost to our economy and help create jobs in Kentucky.”

He added that the bill is a “matter of common sense” since the previous law was “akin to a homeowner not being able to deduct the interest on a home mortgage until the sale of the house”.

The new bill has been welcomed by trade body the Kentucky Distillers’ Association (KDA) and American whiskey producer Sazerac, owner of the Buffalo Trace Distillery.

“On behalf of the more than 1,300 employees at Sazerac’s three Kentucky distilleries – Buffalo Trace, Barton 1792 and Glenmore – I want to thank senator McConnell for his filing of the Aged Spirits Act which will lift a burden that impacts manufacturers of Bourbon,” said Mark Brown, CEO of Sazerac.

“Tearing down these discriminatory barriers will allow all Bourbon distillers to reinvest in their facilities and their employees.”

It was revealed last year that stocks of Bourbon currently maturing in Kentucky had returned to their highest level since 1977.