NEW ECONOMIC ANALYSIS SHOWS ALCOHOL TAX PROPOSAL WILL COST HUNDREDS OF KY JOBS, MILLIONS IN CROSS-BORDER SALES Governor Ernie Fletcherfs proposed alcohol tax increase would have a devastating impact on the statefs economy, potentially costing 400 Kentucky jobs and resulting in millions in lost cross-border sales, according to an economic study issued today by the Distilled Spirits Council of the U.S. (DISCUS). gKentucky has always been at an advantage to its surrounding states because of the lower cost of beverage alcohol,h said David Ozgo, chief economist for DISCUS. gThis added tax will reduce Kentuckyfs ability to attract out-of-state shoppers. Residents of nearby states will be less inclined to drive over the border if they can only save a few pennies, rather than a few dollars.h Kentucky imposes a $1.92 per gallon excise tax on spirits, plus a nine percent wholesale tax on each bottle. In addition, Kentucky imposes licensing fees to operators in the state, which adds another $1.00 to the cost of each gallon sold. Governor Fletcherfs proposals would add an extra six percent on top of this burden, thereby making taxes on Kentuckyfs spirits the highest of any license state in the nation. gUnder the Governorfs plan, the tax burden on a bottle of Bourbon in Bardstown will be higher than in New York,h said Ozgo. Kentucky package stores sell an estimated 185,000 cases annually to out-of-state buyers, worth around $30 million. A six percent increase in sales tax would add $10 to $15 to the cost of a case of spirits, reducing the likelihood that residents of bordering states would make the trip, and reducing the demand for spirits by approximately 150,000 cases — worth $24 million — between in-state and out-of-state purchases. gI donft need a study to tell me that this tax will reduce my business,h said Ken Lewis, owner of The Party Source in Bellevue, Campbell County. gCurrently, almost 90 percent of our business is from Ohio. With the loss of business from this tax increase, we will collect less from other states while losing major income and jobs, and seriously cutting the traffic that helps other retailers, restaurateurs, and entertainment destinations in our state.h Currently, 15 percent of a typical bottle of spirits in Kentucky goes to state and local taxes. Nationwide, the taxes average 13.5 percent per bottle. Tennessee imposes 19 percent. A copy of the study is available by calling DISCUS.