Barr looks to axe Bourbon barrel tax at the federal level

06/06/2013 12:48 PM

On Monday Republican Congressman Andy Barr is expected to introduce legislation in the U.S. House of Representatives to alleviate a tax on bourbon as the spirit ages in barrels in Kentucky warehouses.

As Pure Politics reported on Wednesday the bourbon industry is experiencing a boom of sales both at home in the U.S. and ever increasingly overseas.

The problem, distillers say, is that it is difficult to store enough product to meet demand and the taxes they incur as the products sits stifles their growth.

“The filing of this bill is an important step to the growth of the bourbon industry. Removing a measure that discriminates against bourbon will allow all distilleries to better compete against all other spirits, both domestically and internationally. It will also allow all of us to distill more bourbon, which unfortunately is in short supply due to measures like this, the aging required, and growing demand,” Mark Brown, the President and CEO of Buffalo Trace Distillery said in a statement.

Bourbon producers are currently required by law to capitalize interest expense incurred to finance Bourbon inventories during the long aging process. This interest expense is not deductible for tax purposes until the Bourbon is sold years later after aging – something almost all other liquor categories don’t face because they’re not aged.

Barr’s office said that the Aged Distilled Competitiveness Act would level the playing field between the spirits which would allow distillers to finance their inventory immediately, as incurred.

“I am confident that with the right trade, tax, and regulatory policies, Kentucky’s bourbon distilling, bottling and tourism industry is poised to enter a new era of growth and job creation for the people of this Commonwealth,” said Barr. “That is why I am introducing the Aged Distilled Spirits Competitiveness Act of 2013, which would amend the tax code to end the inequitable tax treatment of aged distilled spirits such as bourbon.”

Promoting another Kentucky signature industry – coal was part of a successful strategy by Barr in the 2012 Congressional campaign against then incumbent U.S. Rep. Ben Chandler. Barr defeated Chandler by six-percentage points in that race.


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