Bourbon barrels on display at Log Still Distillery

Bourbon barrels on display at the new Log Still Distillery in New Haven. (WDRB photo)

LOUISVILLE, Ky. (WDRB) -- The Kentucky Distillers' Association said distillers in the state are expected to pay a record $33 million in barrel taxes for aging bourbon for 2021.

While the association has pushed for lawmakers to help with this before, Eric Gregory said with the exponential growth — now is the time.

"This is really hampering growth and investment in Kentucky, and it really harms our ability to track new distillers to the state, because other states are using this against us," Gregory said.

The association said Kentucky is the only state to tax spirits aging each year.

"This is a discriminatory tax on Kentucky bourbon because we're one of very few spirits that actually spend years upon years aging in a warehouse," Gregory said. "I mean the blessing and the curse of bourbon is you can't make it overnight."

Wally Dant is the president and distiller for the newly-opened Log Still Distillery in New Haven, Kentucky. He said despite his family's history in the commonwealth, the barrel tax was on his mind during the process of deciding on a location for the distillery.

"Whether you're a craft distiller or a large heritage distiller, you're really looking at a significant impact on not only on their bottom line, but their ability to reinvest," Dant said.

At the same time, the federal government is in a tariff war abroad.

According to the Kentucky Distillers' Association, exports are down about 50% in Europe because the EU put a 25% tax on American whiskey in 2018.

In December, Gregory said it's expected to double if the Biden administration doesn't negotiate.

"I think everybody believes that Kentucky is bourbon. And if we continue to believe Kentucky's bourbon, then we've got to do everything we can do to really support our expansion of that, nationally and internationally," Dant said.

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