The Kentucky legislature is attempting to get a bill passed that would place a 6% tax on all alcohol sold in the state in addition wholesale taxes that currently exist on bourbon. This measure is being met with some pretty strong resistance from bourbon and other alcohol industry representatives. In fact, industy representatives protested this tax today by pouring bourbon on the Kentucky State Capital's front steps. While I am not quite sure what they thought they would accomplish by doing so, I suppose desperate times call for desperate measures.
The bill is set to go before the House and Senate before the Governor gets to review it. It looks, however, like the bill has support from all the right/wrong places (depending on your point of view) and will be passed in some form or another. Since Kentucky is facing a $450 million possible loss in revenue for the upcoming year, several politicians are looking at this bill as a measure to create more money for the state. In fact, the bill is slated to be signed by February 14, 2009, and would be put immiately into effect.
What does this mean for bourbon? Well, if the tax is implemented, thus raising the price of a bottle of bourbon, in theory people will buy less of it. With less demand, retailers cannot maintain their current supply, and will stock less booze. This in turn will hurt distributors and then producers/distilleries, the end product being job loss. It could also cause Kentuckians to cross state borders to buy their beloved bourbon (and other spirits) for cheaper. And, let's not forget the coopers that make bourbon barrels and the bartenders that serve bourbon. Again, this downturn is just theory. What happens in practice may be different. I suppose we will see, and in short order. Stay tuned for updates.
Listen to an interview with Eric Gregory, President of the Kentucky Distillers’ Association and find out how to voice your opinion to Kentucky legislators about this tax here.
So, what do you think about this probable tax? Fair? A disaster waiting to happen? A necessity?