Jack Daniel's distillery targeted for more taxes

By Joe Edwards

Associated Press

Published: Thursday, Oct. 20 2011 2:56 p.m. MDT

This Oct. 19, 2011 photo shows Charles Rogers outside the entrance to the Jack Daniel distillery in Lynchburg, Tenn. Rogers is spearheading a proposal that asks the Tennessee legislature to authorize a local referendum requiring the distillery to pay a tax on each barrel of whiskey it produces.

Mark Humphrey, Associated Press

NASHVILLE, Tenn. — For decades, Jack Daniel's whiskey has celebrated its small Tennessee hometown of Lynchburg with folksy, black-and-white advertisements urging folks to slow down and have a sip.

Now local officials want the maker of the world's top-selling whiskey to pay a bigger bar tab as they struggle with their budget. How does up to $5 million sound?

A measure approved by the Moore County Council asks the Tennessee legislature to authorize a local referendum on whether the distillery should pay that much in new taxes on the 500,000 barrels it fills with whiskey each year.

The 145-year-old distillery, tucked away on 1,700 hilly acres down the road from Lynchburg's quaint town square, now pays $1.5 million in local property taxes.

If the barrel tax is approved, it would be a huge help to the local government, whose annual budget is $3 million and would get every last drop, so to speak, of the money.

Distillery officials say they already do their civic and fiscal duty.

"We're paying our part, our fair share," said Tom Beam, senior vice president and general manager of production at the facility. He said the distillery has already helped the area in several ways, including assisting with renovations at the courthouse and a swimming pool.

"We operate as a partner with the county," he said.

He worries such a law would be a terrible precedent for other businesses in the state.

"Other counties could try to do the same thing, attacking businesses. It could be a job killer," he said.

Nevertheless, supporters of the referendum say Jack Daniel's still owes more.

"Lynchburg and the people of Moore County have been involved in the success of the Jack Daniel's brand; the value of the brand worldwide is due in no small measure because they have marketed our town and people successfully," said Charles Rogers, who has led the campaign for the new tax.

The town and Jack Daniel's brand are entwined like few other products. The iconic black-and-white label of Jack's "Old No. 7" whiskey even lists Lynchburg's population. The bottle says 361, but the town and county really have about 6,400 people. Ten million cases of the sour mash whiskey, led by Old. No. 7, are sold worldwide every year.

"They owe something back to the county," said Rogers, a Lynchburg native and retired executive with the Chrysler Corp.

For those with thirsty throats fearing a retail price increase if the proposal passes, corporate officials would not speculate. But Beam offered this sobering thought: "We'd be out several million dollars a year. We'd have to look to save money."

The proposal will go to the General Assembly early next year. If authorized there, the referendum in the county could be held as early as next November.

Rogers believes it will be a spirited fight in the legislature, but if authorized there, "I feel pretty certain it would pass (locally)."

State Rep. Debra Maggart, chairwoman of the Republican majority in the Tennessee House of Representatives, agrees the proposal will face opposition in the legislature, where anti-tax sentiment is strong in her party.

"No taxes will be raised on our job creators," she predicted.

The Tennessean newspaper reports that the distillery's owner, Brown-Forman Corp., is ready to make political contributions as a possible fight looms: The company's political action committee has $278,000 heading into the 2012 elections.

About 210,000 people visit the distillery annually, making it a top tourist draw in Tennessee. With 450 employees, it's the biggest industry in the county. According to Brown-Forman, Jack Daniel's brands had an 8 percent gain in net sales for the full year ending April 30. The company's net sales for fiscal 2011 was more than $3.4 billion.

Rogers, who moved back to Lynchburg after a career in corporate work, said he has nothing personal against the whiskey.

"I never was a heavy drinker, but I liked Jack Daniel's when I had a drink," he said. "I was a good customer."

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