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Alcohol industry fights tax plan

FRANKFORT — Kentucky's alcoholic beverage industry unleashed a public relations blitz Monday to whip up outrage against a proposed 6 percent sales tax on booze.

As the beer distributors placed signs in restaurants asking patrons to call their lawmakers, a bevy of industry executives descended on the state Capitol to lobby in person.

It's "a slap in the face" of an industry "that was caught off guard," said Bill Samuels, president of Maker's Mark bourbon whiskey distillery in Loretto.

Industry officials will be back in Frankfort Tuesday with many of their workers and supporters in tow for a 2 p.m. rally at the Capitol.

Leading lawmakers said Monday evening they have generally agreed on a plan to raise $150 million to help plug an estimated $456.1 million shortfall in the state budget by increasing taxes on alcohol and cigarettes.

The tentative plan calls for increasing the tax on cigarettes by 30 cents and adding a 6 percent sales tax on alcohol. Lawmakers had also been considering raising the wholesale tax on all alcoholic beverages from 11 percent to 20 percent.

The top two legislative leaders — Senate President David Williams and House Speaker Greg Stumbo — said last Friday they hope their chambers can present to Gov. Steve Beshear by Friday a revenue-producing bill and a budget bill that could take effect immediately.

Industry officials said any tax increase on the alcohol industry is the wrong course to take.

"I don't like it at all," said Jim Rutledge, master distiller of Four Roses in Lawrenceburg, which has about 79 employees. "Every time there is a shortfall at all, we're the first business looked upon to generate additional income."

He said the last increase on the state wholesale tax was "just in 2005, where our tax rate went from 9 percent to 11 percent."

The tax increase would cause a decline in one of Kentucky's few growth industries, Rutledge warned.

"As other states see what Kentucky is doing to a home-grown signature industry, others will follow suit, driving the prices up and decreasing the demand," Rutledge said. "That will have a negative impact on our production."

Rutledge noted that California taxes its wine industry at about 75 percent below the national average. But in Kentucky, the bourbon industry is taxed at 60 percent above the national average, he said.

"We're already taxed at a higher rate than most of our adjacent states."

Brian Bogard, director of administration for government affairs at Anheuser Busch Companies in St. Louis, called the proposal "a tax on the working people."

Instead of raising the tax on alcoholic beverages, Bo gard said, the state should increase the 6 percent sales tax on all products.

The tax under consideration could raise the price of a 12-pack of beer by $3, said Ann B. McBrayer, president of Kentucky Eagle, a beer distributor in Lexington.