Tuesday, August 07, 2001

Liquor excise taxes targeted

The Associated Press

        WASHINGTON — Makers of distilled spirits, some of which are based in Kentucky, are fighting to roll back the federal excise tax on liquor.

        A bill to lower the tax, sponsored by U.S. Rep. Ron Lewis, R-Cecilia, is co-sponsored by more than 60 House members, including every Kentucky representative except Anne Northup, R-Louisville.

        Currently, the federal distilled-spirits tax is based on a product's alcohol content. A gallon of 100-proof liquor, for example, has an excise tax of $13.50. A 50-proof beverage is taxed $6.75 per gallon, because it contains half as much alcohol.

        “That's a pretty huge tax,” Mr. Lewis said. Cutting the tax will protect an industry that employs thousands in this state, “so that's good for Kentucky families,” he said.

        That doesn't mean Mr. Lewis, a Baptist minister, has changed his mind about alcohol. “I don't drink, and I don't encourage anyone to drink adult beverages.”

        The bill faces hurdles because Congress has already passed a sweeping tax-cut legislation this year, but supporters are pledging to focus attention on the need to lower the tax. In the early 1980s, the excise tax was lower — $10.50 per 100-proof gallon. But the 1984 Deficit Reduction Act and a 1990 deficit-reduction tax both targeted the industry.

        Now, the deficit is gone but the government still collects on the tax.

        “In an era of budget surpluses, it's the right and appropriate thing for Congress to repeal these deficit-reduction taxes,” says Mark Gorman, senior vice president of the Distilled Spirits Council in Washington. About 40 percent of the cost of a bottle of spirits is due to taxes, he adds.

        The Distilled Spirits Council, the trade association that represents spirits makers and importers, says the industry pays $3.7 billion in excise taxes each year. The tax cut would save distillers about $860 million each year, and officials predict some of the savings would be passed on to consumers.


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