‘Killer’ Tax Proposed in Oregon

I recently made a trip up to Portland to attend the “No New Oregon Beer Tax Rally” at the Green Dragon. What I found out about the tax hike proposed by Oregon House Bill 2461 shocked me and left me worried for the future of Oregon’s world famous craft brewing industry. HB 2461 was sponsored by five Oregon Legislatures (Representative CANNON, Senators DINGFELDER and MORRISETTE; Representative DEMBROW, and Senator ROSENBAUM) who will be referred to from here on as the “Fab-5” for purposes of brevity.

I wonder if the Fab-5 ever heard the old adage “Every solution presents a whole new set of problems”? I’m don’t believe the Fab-5 really bothered to look at the problems their “solution” for funding additional state mental health, drug, and alcohol treatment programs would create when they sponsored HB 2461 which proposes a 1900% increase in the barrel tax on beer in Oregon. That’s not a typo! They would like to raise the tax on a barrel of beer from $2.60 per barrel to $52.21 which is a 1900% increase.

They downplay the bill as a reasonable and minor tax increase needed because Oregon’s beer tax, ranked 47th in the nation, is too low. Huh? Let me get this straight. Your main argument for raising the tax I pay on a pint of beer 1900% is “Well the tax hasn’t been raised in a long time.” Not because it is right or fair, or because there is a demonstrable cause and effect between beer and these programs they seek to fund with this tax, but simply because the tax hasn’t been raised since 1977.

Sorry that’s not a good enough reason to damage the states beer industry and the Oregon microbrewers that have grown into a vibrant Oregon success story that creates roughly 15,000 direct and indirect beer industry related jobs in this state. Not only does Oregon’s craft beer fill our pint glasses with world-class artisanal brew, it has created a “beer tourism” draw that many peripheral Oregon businesses’ benefit from.

You’re probably wondering “Since this tax is levied on all beer consumed in Oregon, why does it impact our craft brewing industry more than other states selling their beer here?” Though this tax is on all beer consumed in the state, Oregon Craft Breweries biggest market is Oregon. In 2008, 36% of the beer made by Oregon Craft Breweries was sold in Oregon. Out of all the beer consumed in the state, 11.4% was Oregon Craft Beer. This means our craft brewing industry, as a group, will be impacted most by the proposed 1900% tax increase.

If the Fab-5 insists on looking back to 1977, let’s take a look at how many barrels of beer were being consumed in Oregon then. Numbers are hard to come by but I did discover a study on Oregon’s bottle bill that puts the consumption in 1973 at roughly 1.5 million barrels (By the way, Blitz-Weinhard was the only brewery in Oregon back then). Using that as a starting point, the taxes generated by those sales were approximately $3.9 million. Last year Oregonians consumed 2.72 million barrels of beer, resulting in over $7 million in revenue from the current tax. Whereas the Fab-5 keeps waving the “no increase since 1977” flag, they seem to have completely missed the fact that tax revenues from beer have increased about 56% in that same time-span.

Of course that doesn’t add in the revenues they reap from having close to 90 breweries here in the state, providing jobs and paying business, property, and income taxes. They wouldn’t want to muddy the water with a bunch of facts that don’t support their position.

The other major point pushed by HB 2461 is these additional taxes are needed to pay for additional state mental health, drug, and alcohol treatment programs. Out of $155.8 million in net revenue from alcohol excise taxes in 2008 only $7.9 million was targeted to those programs. I do not dispute the fact that these programs are important, I do however wonder why these important programs are being so woefully underfunded and why Oregon’s beer drinkers are expected to shoulder the entire burden. Oh, and one other thing