NASHVILLE (AP) - Jack Daniel's officials are toasting the defeat of a proposal to tax whiskey at its celebrated Tennessee distillery.

The Moore County Council in Lynchburg, Tenn., voted 10-5 Monday evening to kill the proposal, which would have taxed Jack Daniel's up to $5 million annually, with all the revenue going to local coffers.

"We hope we've been able to demonstrate that the distillery pays more than its fair share of taxes and that we've contributed to our way of life in Lynchburg," said Tom Beam, senior vice president and general manager of production at the facility.

The vote reversed an earlier one that asked the Tennessee legislature to authorize a local referendum on the proposal.

"We've educated the community a little more," Beam said Tuesday in a telephone interview from the distillery, located in the hills of south-central Tennessee. "They realized after we got our side of the story out how much we do."

Th e 145-year-old distillery and its employees, along with Lynchburg, have been the focus of Jack Daniel's folksy advertising for years. Bottles of the charcoal mellowed sippin' whiskey list Lynchburg's population as 361, but the town and county really have about 6,400.

The distillery, owned by Louisville, Ky.-based Brown-Forman, now pays $1.5 million in local property taxes.

"We hated to see this drive a wedge through our family here," Beam said. "This is our home and we'll try to do the right thing."

The Jack Daniel Distillery, with about 450 employees, is the largest employer in Moore County. The local Chamber of Commerce came out against the proposal at the meeting.

Supporters of the proposal said the issue is dead for now and they may quit trying.

"That's democracy in action, I suppose," Charles Rogers said of the vote after spearheading the proposal.

"I may bow out of this," he added. "But I still think people ought to have the right to vote on it (in a referendum)."

Ten million cases of the sour mash whiskey, led by Old No. 7, are sold worldwide every year, making it the No. 1 brand in sales globally.

"Our friends and neighbors around Moore County, the state, the country and even globally have been supportive," Beam said.

Company spokesmen never said whether the tax would have meant higher prices at the retail level.

Ironically, Moore County is dry, meaning Jack Daniel's cannot be sold legally in the county.