Kentucky bourbon-makers toast bill phasing out barrel tax

FRANKFORT, Ky. (AP) — In the years it takes Kentucky bourbon to mature in new oak barrels, producers have faced two certainties: They lose a portion of the aging whiskey to evaporation — known as the angel's share — and pay a tax on the containers. Now they're going to get relief from one of them.

Kentucky's legislature voted to completely phase out the property tax on the value of barrels of aging spirits. The action — taken in the final hours of this year's session — was toasted by the booming bourbon industry but left a bitter taste among some local leaders whose communities rely on the tax money. Gov. Andy Beshear signed the measure soon after it reached his desk.

The state's $9 billion distilling industry sees the bill's passage last week as a milestone to help secure bourbon supremacy in Kentucky.

Supporters said without the action, distillers' tax payments would have mounted amid surging inventories. They worried that producers would start building warehouses in other states, which could result in production moving away. The Bluegrass State is home to 95% of the world's bourbon production, the Kentucky Distillers' Association said. The barrel tax is assessed only in Kentucky, and its removal will stimulate more rounds of growth in a state where nearly 12 million barrels of spirits are aging in warehouses, it said.