Massive Oregon beer, wine tax hike bound for slow death in legislature

(The Center Square) – Oregon’s beer and wine costs could soar by as much as 2,800% and 1,700% respectively under two proposed tax hikes that industry representatives say could not have come at a worse time.

In Oregon, a 31 gallon barrel of beer is taxed at $2.60 per barrel while wine is taxed at 65 cents per gallon. Those rates were first set when bell bottom jeans and boomboxes were all the rage, but state lawmakers believe raising them now would help cover the costs of binge drinking.

House Bill 3296 would raise the beer tax from $2.60 to $72.60 and the wine tax from 65 cents to $10 per gallon.

The bill, sponsored by state Reps. Tawna Sanchez, D-Portland, and Rachel Prusak, D-West Linn, has not sat well with beer and winemakers who say it could devastate their business.

“Closures due to COVID-19, coupled with the unprecedented wildfires this fall, have had a devastating impact on Oregon’s breweries, wineries, cideries, distilleries, restaurants, bars, and hospitality sector,” the Oregon Brewers Guild said in a statement. “The last thing these local businesses need are the unprecedented tax increases proposed in the House Bill 3296.”

Opponents of the bill also point to polls commissioned by the Oregon Beverage Alliance which found 74% of respondents were against alcohol tax increases.

Oregon’s burgeoning beer and wine industry has become renowned for its ales and pinot noir wines. By the end of 2019, the Oregon Wine Board reported that 908 wineries and 1,297 vineyards called the state home. Three out of four wineries are small and produce fewer than 5,000 cases per year.

Based on budget data from the Oregon Liquor Control Commission, tax revenue from the sales of distilled spirits, malt beverages, and wines make up the third biggest revenue stream for the state with a biennia value of more than $1.4 billion. Much of that money goes to schools, police, and public health programs.

As the state looks at a possible budget surplus this year, calls for new and higher taxes have grown quieter in the halls of the state capitol.

While alcohol industry heads argue the bill would force breweries to pass higher costs onto the consumer, supporters of the bill say that’s the point. Addiction advocates Oregon Recovers says cheap beer and wine are a toxic mix for binge drinking which remains on the rise in the state.

All revenue raised by HB 3296 would go towards “addiction recovery districts.” The bill seeks to fund one residential treatment bed per 2,000 residents, one detox center per 3,000 residents, and one intensive outpatient opening per 1,000 residents.

Each district would see an increase in residential treatment beds, detox centers and inpatient and outpatient centers.

The most recent data from the Oregon Health Authority shows 1,923 Oregonians died from alcohol-related causes, including chronic diseases, acute poisoning, injury, and perinatal causes in 2017. Such deaths in 2017 were up by 34% over 2001.

Studies suggest heavy drinking is costing the state economy too. One report by ECONorthwest pegged the price of excessive drinking on the Oregon economy at $4.8 billion in 2019, half of which was attributed to lost productivity.

The stakes are incredibly high for breweries right now in the pandemic, which the National Brewery Association reported cost the industry 77% of its sales last summer despite a small bump amid initial state COVID shutdowns.

Addiction and recovery programs remain at the top of Gov. Kate Brown’s agenda since she declared addiction a public health crisis in 2018. However, beer and wine tax increases made no appearance in her proposed budget released last winter.

Prior alcohol tax increases have seen swift defeats in the state legislature before thanks to fierce pushback from beer and wine giants. As of Tuesday, Prusak’s name was missing from HB 3296’s list of sponsors on the Oregon Legislature’s website, which now includes just Sanchez.

HB 3296 awaits its first hearings in the House Committees on Behavioral Health, Revenue, and Ways and Means. The bill will need a three-fifths majority to pass the chamber.

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