Small-volume distillers in Michigan must deal with Prohibition-era rules and regulations and a tax system that treats them the same as giant spirit makers like Bacardi.

The Michigan Senate recently approved my legislation to provide a reduced tax rate to micro-distillers, similar to the reduced tax rate applied to microbrewers.

This initiative would help startup spirit producers and encourage entrepreneurship and job creation in Michigan. The goal is to help foster innovation and success in these small businesses, so that they may one day become the next Jack Daniel’s.

Senate Bill 448 would provide a tax cut for distillers on the first 60,000 gallons of spirits manufactured in a calendar year, in a similar fashion to the tax credit currently available to eligible brewers and brewpubs.

Michigan operates as a “control” state for the sale of spirits with the Liquor Control Commission as the wholesaler for all spirit products. Current law requires the commission to establish uniform prices for the sale of liquor that return a gross profit to the commission of at least 51 percent and not more than 65 percent.

Under SB 448, the price for the first 60,000 gallons of spirits manufactured by a distiller in a calendar year must return a profit to the commission of not greater than 20 percent. Each bottle produced in excess of 60,000 gallons would be subject to the current requirements.

Michigan’s spirit tax is having a terrible impact on local craft distillers — putting our state at a tremendous disadvantage. Some distillery owners have reported that their products are currently being taxed in Michigan at a rate 28 times greater than Indiana.

This is about helping an up-and-coming industry thrive in Michigan. The state’s spirits industry could be worth $400 million to our economy once it starts firing on all cylinders. That means more jobs, economic growth and increased tax revenues.

Sen. John Proos, R-St. Joseph, represents southwest Michigan.