Brewers and beer drinkers will not toast the new beer tax plan.
They're at it again.
Every two years, when the state legislators return to Salem, it doesn't take long for the cry of “Raise the beer tax” to rise from a small, but vocal, minority of the assembly.
This session is no different, although they are yelling a lot louder and asking for a steeper tax hike. But their arguments are as hollow as ever.
This time Senators Jackie Dingfelder and Bill Morrisette – in a move eerily reminiscent of the Bush administration's creative renaming schemes (Think “Healthy Forest Act”) – are calling their beer excise tax increase a new “prevention, treatment and recovery tax.” But, in reality, House Bill 2461 is nothing more than a 1,900 percent increase in business taxes targeting one industry: brewing. Not illegal drugs, not alcohol in general. Beer.
The bill would raise Oregon breweries state tax burden from $2.60 per 31-gallon barrel to $52.21. It would give Oregon the highest beer tax in the country.
In the coming months, you will hear plenty about this from both sides. Jeff Alworth at Beervana is already tuned in. And I'm sure this isn't the last I will write about this issue. I spent six years as executive director of the Oregon Brewers Guild refuting the pro-tax forces' biannual claims. Today, I will try to keep it brief and point out the most glaring inconsistencies in their attack.
- Oregon has one of the lowest state beer taxes in the country and it hasn't been raised since the Trail Blazers were NBA champs. That's true, but for good reason. Brewing is an important – and legal – industry. Oregon's craft brewers not only contribute greatly to the quality of life here in Oregon, but they directly employ more than 5,000 Oregonians, many at family wage jobs. Oregon is the second-leading hops growing state in the country. We also grow malting barley, produce yeast, bottles and packaging materials for beer. Add in jobs in distribution and retailing, advertising, equipment manufacturing, all of the areas in which the brewing industry touches the Oregon economy and you have an economic impact of $2.25 billion per year.
- Raising the tax will curb underage drinking. Not likely. Underage drinking has been on a steady decline for more than 30 years without punitive tax increases on brewers. Their argument ignores the fact that most underage drinkers are not the ones buying the alcohol. They steal it from parents or get an older friend of sibling to buy for them – often paying more than the shelf price. No 18-year-old who is looking to party on a Friday night is going to tell his friends, “Hey, the price of a sixpack just went up a buck. Let's stop drinking.”
- The tax amounts to only small change per drink for consumers. Wrong again. First off, this is not a consumer tax. This is a business tax, levied on in-state producers or local wholesalers who distribute out-of-state beer. It is not “Big Alcohol” who is being taxed. It is your neighbor. And, because the tax gets charged at the brewery or wholesaler level, it will be multiplied, like any other cost of business, as the beer moves from brewer to wholesaler to retailer to consumer.
So how much are we talking? The tax will apply to all beer sold in Oregon, regardless of the size of the brewery. Based on approximate in-state sales of some local breweries for 2008, here's the kind of tax increase breweries are looking at:
- New Old Lompoc Brewery: from $5,330 per year to $107,030
- Hopworks Urban Brewery: from $7,857 to $157,778
- Ninkasi Brewing: from $18,460 to $370,691
- Rogue Ales: from $34,091 to $684,577
- BridgePort Brewing: from $60,315 to $1,211,167
- Deschutes Brewery: from $215, 990 to $4,337, 241.
And that's if the breweries don't grow. For every 1,000 barrels in new production the proposed tax would cost nearly $50,000 – enough for one family wage job.
At a time when Oregon's unemployment is at its highest in decades, can this be a good idea?
If you don't think so, let your legislators know. You can find your local legislator's contact information here.
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