Moore County to Seek a Tax on Whiskey Barrels

A lawmaker from south central Tennessee says he’ll sponsor a bill next year to tax the barrels used to make Jack Daniel’s whiskey. For tiny Moore County, five million dollars are at stake.

A new opinion from the state Attorney General forced the hand of state Representative Dave Alexander of Winchester. It says that, Yes, you probably could tax the barrels that whiskey-makers use.

Alexander says he will seek the new tax that the Moore County Commission voted to pursue.

But the freshman Republican says it was a hard decision, given that he was elected on a platform of what he calls “basic conservative principles.”

“One of those principles being low taxes, or certainly no more taxes, if possible. And here we’re talking about some people that say they want a tax. And on the other hand, you’ve got their right of self-determination. They have that right.”

The question would go to county voters as a referendum. If passed, the tax would affect the Jack Daniel’s Distillery, literally the only manufacturer in the cash-strapped county.

The tax wouldn’t be on whiskey, exactly. It would be on the barrels that the whiskey is aged in. The barrel would become taxable – when they pour the whiskey in it.

Web Extra:

Representative Alexander says the issue of some sort of tax on the distillery has been debated for about five years. The county simply needs the money, Alexander says.

“Moore County is the smallest county in the state, probably the least populated in the state. When money is given, whether it’s based on population, whether it’s …based on geographic size, or pretty much whatever metric you want to use, Moore County always gets the least amount of everything.”

Proponents argue that the county’s only manufacturer is the major user of the county’s roads. Alexander explains.

“They contend that Jack Daniel’s, their business there, with the 18-wheelers, and all of the tourism, and the traffic on the highways, and the wear and tear on the by-ways, that they need some additional infrastructure money.

“This has been a hard decision for me. …I’m a freshman, new, first-term Republican, the first one in this district since the Civil War. I was elected basically on just your standard conservative principles.

“When we as states, we tell the federal government, and we want to have control over this, and we want to make decisions on that. Should we, inside the state, not have something similar for the individual cities and counties? The people in Moore county made this decision. They live there, they go to school there, they work there. In many cases they’ve spent their entire lives there. And they want the right to vote on this…

“They just want the right to vote in a referendum, to put a ten dollar tax on the barrels, the barrels only. That would mean approximately five million dollars for the people in Moore County.”

The opinion from the state Attorney General’s office talks about a county “that approved the manufacture of intoxicating liquor before 1950.”
That’s a way to lock the impact of the law down to just one county. The legal theory here is that you can’t make laws that only affect one locality UNLESS there is something unique about the locality – and Moore County is the only county with a distillery that old.

The opinion in the first paragraph agrees with one of the arguments of the proponents of the local tax. The definition makes sense (“is defensible”) because a county with a distillery more than a half-century old “is more likely to the site of a large, well-established manufacturer that places a heavy burden on local government services.”

This is exactly what the Moore County backers of the tax argue – the big trucks that carry the whiskey, and the makings, and the equipment back and forth are wearing out the “infrastructure,” the roads and bridges and so forth that the county must maintain.

By legislative standards this is a reasonable argument. Similar bills have been argued based on the wear and tear caused by lumber trucks, or coal trucks.

Even though the draft bill screened by the Attorney General’s office refers to the new levy as a “fee,” the AG says it’s a tax.

“Although the bill refers to the proposed imposition as a fee, its proceeds would be paid into the general fund. The imposition, therefore, would be a tax, not a fee.”

The language is important – many of the recently elected conservatives in the state House and Senate refuse to acknowledge that they are voting on a tax, requiring the language “fee” before they will vote for such a bill.

Its not the only time Jack Daniel has made news recently – this blog entry by Knoxville News-Sentinel report Tom Humphrey explores a strange Tennessee law that appears to prohibit Jack Daniel’s whiskey from being shipped by common carrier to anyplace in the state.

Incidentally, the question of the legality of transporting Jack in the Black is still up in the air – the bill mentioned is deferred to 2012.

The Jack Daniel Distillery lists itself as the “oldest registered distillery in the U.S.”

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