Want to Know About the Oregon Beer Tax?

What’s the issue?

House Bill 2461 would raise the Oregon beer tax from less than eight-tenths of a penny per glass to $0.15.

The tax is paid on beer that is sold for consumption in Oregon, either by the brewer or the distributor who imports it into the state.

It is projected that the tax increase would raise about $165 million per year or $330 million for the biennium.  The money would be dedicated to funding alcohol and drug treatment, prevention, and recovery services, with $50 million going to the general fund.
Why do we support it?

Oregonians paid an estimated $3.2 billion in 2006 for alcohol-related crime, violence, lost productivity and health costs. That’s eight times greater than the $395 million in tax revenues collected in 2006 from the sale of alcohol.

Every dollar spent on alcohol and drug abuse prevention and treatment save five dollars!

It is realistic and efficient to fund prevention and treatment services with revenues from the sale of the product that creates the problem.

These services have been cut in recent years, while the beer tax hasn’t been raised in 32 years.  The current tax doesn’t even begin to meet current needs to people who require and are asking for help.

Add drug abuse, and the cost to Oregonians reaches $5.93 billion. 

Do prevention and treatment work?

Yes, studies consistently show that crime goes down, employment goes up, and families are saved when prevention and treatment are made available.
Why hasn’t the Oregon beer tax been increased in 32 years? 

Because the beer industry – especially the beer distributors lobby – have had an effective hold on legislators, contributing millions of dollars in campaign contributions.  Legislators have had a long-standing, cozy relationship with industry lobbyists, and some, in fact, found themselves in trouble when they took some all-expenses-paid vacations courtesy of the industry lobby.

Efforts to raise the beer tax have been made in prior sessions of the Legislature with no success.  But with a Democratic majority in both houses, and an $885 million state budget deficit, its chances look better than they have in years.

Have other states raised their beer tax during the past 32 years?

Most have.  In fact, Oregon’s beer tax is effectively, the lowest in the nation. Two other states have lower beer taxes, but they also have a sales tax attached.  Of course, during this time, beer prices have increased, while the tax hasn’t.

The industry keeps arguing that the tax would amount to a 1,900 percent increase.  What about that?

Any increase looks big when multiplied against almost nothing

Oregon’s brewers say a tax increase would devastate them, causing job losses and financial ruin.  True?

Patently false. There is absolutely no evidence anywhere that a beer tax increase would mean fewer sales and lower profits for Oregon’s brewers.  Prior studies from other states say the only customers who may be drinking less because of higher taxes are problem drinkers and underage drinkers.

In Oregon, underage drinking is a bigger problem than most other states.  Alcohol use by Oregon 8th graders is almost double the national average.

What about the industry argument that Oregonians will see mammoth price increases – up to $2.00 per pint of beer?

Again, there is no evidence this will be the case.  The industry talks about a price markup by middlemen, distributors, and retailers based on a higher tax.  But a survey of convenience stores in eight other Western states – states with the beer tax up to 500 percent higher – found no relationship between the excise tax level and the price of beer.

Is there an example of this?

Yes, this month we went shopping. And we found that a six-pack of Widmer sold at a Portland Fred Meyer was more expensive than the same product at a Vancouver Fred Meyer, even though Washington’s beer tax is three times higher than Oregon’s and where the sales tax is 6.2 percent!

The six pack in Oregon cost $9.49, while the six pack in Washington cost $8.69.

The industry keeps talking about price per-barrel.  Why?

Because $49.61 per barrel sounds like a lot scarier than $0.15 per glass.

Why couldn’t the proposed legislation exempt Oregon brewers?

It could, and has.  In the last session of the Legislature, most local brewers were made exempt from a proposed tax increase (they still opposed it). This time around, sponsors of the bill decided to include them in the tax increase.

Why not tax hard liquor and wine instead?

Wine is already taxed at about $.04 per glass.  And customers of distilled spirits (hard liquor) pay some of the highest prices in the country – partly to support the OLCC’s warehousing, distribution and retail infrastructure and to generate the $135 million per year paid out to the state general fund and to local governments.

Where does the public stand?

Surveys have consistently shown that most Oregonians would support a beer tax increase to pay for needed prevention, recovery and addictions programs.

The latest survey conducted in February, 2009 found that 61 percent of Oregonians favor increasing the beer tax while 65 percent oppose making significant cuts to substance abuse and treatment programs, even in light of the state’s recent budget woes.  The survey was conducted by Moore Information, Inc, a local opinion research firm.

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