UPDATE 2/13/09: Kentucky Senate passes bill 24-14, Governor will sign it into law this afternoon.

UPDATE: 2/12/09: The tax increase passed committee and will be voted on by the full Kentucky legislature on Friday. 6% on retail sales by the bottle. (By the glass was already taxed at this rate.)

Opponents of a proposed sales tax on alcohol held a boisterous rally at the Capitol in Frankfort, Kentucky yesterday culminating in what organizers likened to the Boston Tea Party — a mass splashing of bourbon on the front steps of the statehouse.

“How many of y’all believe Kentucky bourbon needs more taxes?” shouted Makers Mark President Bill Samuels, one of the industry’s more colorful spokesmen and among nine distillery officials who emptied bottles of their signature whiskey outside.

The crowd roared “No!” and joined in chants of “No more taxes!” and “Save Our Jobs” as speakers protested that alcohol already is taxed enough at the wholesale level and with other taxes.

The event was held to protest the 6 percent alcohol sales tax House and Senate leaders propose to help reduced the state’s $456 million budget shortfall.

“If spirits were under taxed in Kentucky, I don’t think any of us would be whining about paying our fair share,” Samuels told several hundred people who filled the Rotunda and overflowed into the halls and upper balconies.

Clapping, shouting and stomping, participants enthusiastically joined in the rally and then swarmed outside to

watch officials in unison dump nine bottles of bourbon on the steps — representing Kentucky’s nine distilleries.

Organizers also brought a convoy of nearly two dozen tractor-trailers emblazoned with beer and whiskey logos that spent the day circling the Capitol, causing some traffic delays but delighting tax opponents.

“I love it!” said Donald Berg, executive vice president of Brown-Forman, who emptied a bottle of Woodford Reserve bourbon outside the Capitol. “They look fabulous!”

Lawmakers say they need revenue but protestors yesterday said it’s unfair to single out retail sales of alcohol — arguing that increasing the price of beer, wine and liquor will drive down sales and cost Kentucky jobs in distilleries, distributorships, retail sales and breweries.

Berg said Brown-Forman alone employs about 1,300 people with an annual payroll of about $200 million and pays $25 million a year in taxes. Distilleries overall employ about 3,200 people in Kentucky and pay more than $115 million in state and local taxes, according to the Kentucky Distillers’ Association.

Throngs of workers turned out for yesterday’s rally including Mary Ellen Ballard, a 21-year distillery worker at Makers Mark in Loretto.

“We’re really worried about the taxes and having to lay people off,” Ballard said.

Some industry representatives said that if the state must raise taxes, it should do it through the state sales tax of 6 percent on most consumer goods.

“Increase the state sales tax so everyone from Pikeville to Paducah helps us get out of this bind,” said Dennis George, who is with Clark Distributing Co. in Lebanon.

Speakers called on lawmakers to reject the alcohol sales tax.

“It is incumbent on our leaders to act in a rational manner,” said Mark Brown, with Buffalo Trace distillery in Frankfort. “It is not rational to raise taxes on one of Kentucky’s major industries!”

It’s not clear what effect the protest will have on House Bill 144, which contains the alcohol tax as well as a 30-cent increase in the state’s 30-cent per pack cigarette tax.

HB 144 is scheduled for a vote today and House Speaker Greg Stumbo, D-Prestonsburg, said he believes it will get enough votes to pass.

Both Stumbo and Senate President David Williams, R-Burkesville, said they don’t think the alcohol tax increase would have an impact on jobs in Kentucky.