Lexington, KY - Horse Capital of the World

Kentucky produces nearly all of the world’s supply of Bourbon and in recent years the United States’ only native spirit has experienced a resurgence of popularity. This has caused an unprecedented growth in production levels at distilleries and has increased tourism throughout the state – particularly stops along the Kentucky Bourbon Trail.  All wonderful things for Kentucky!

Like many other states, Kentucky is experiencing a budget deficit and therefore lawmakers are looking for ways to make up for these losses. One of the proposed solutions includes a new 6% sales tax on liquor sold at package stores. Currently the liquor industry in Kentucky is taxed at the wholesale level.  If this tax increase is approved it would mean the industry would be taxed twice – once at the wholesale level and then again at the consumer level.

Yesterday I attended a rally at the capitol rotunda in Frankfort to support industry leaders in their attempt to encourage legislatures to vote NO for House Bill 166 – the bill that would make these new taxes go in to effect as early at May.  I was surprised to learn that Kentucky’s excise tax rate for spirits and beer is already significantly higher than most of the surrounding states. If this bill is passed it would be detrimental to Kentucky’s bourbon industry causing lost jobs (currently it employs nearly 18,000), competitive disadvantage and higher prices for consumers.

I’ve given this subject a lot of thought over the past 24 hours and have decided nothing about this bill is good. In fact, it is just bad…bad for business, bad for consumers and overall a bad decision for Kentucky.  Shouldn’t our state leaders want to give a growing business a chance to really flourish rather than stifle an industry that is experiencing healthy growth in a tough economy where many industries are failing?