Oregon has developed a national reputation for its microbreweries and hops-minded citizens.
But a few months before the Oregon Legislature begins its new session, some Oregon legislators are looking to hike the state’s beer tax, transforming it from among the lowest in the nation to the highest.
Referred to by supporters as an alcohol recovery fee, the proposal would levy a 10 cent tax per 12-ounce glass, or about $1.11 per gallon, surpassing Alaska’s $1.07 per gallon tax, currently the nation’s largest.
Supporters of the tax increase argue that the beer companies aren’t paying their fair share for the public toll of alcohol abuse and treatment programs, but opponents argue that a beer tax would have a negative effect on a state with a large beer-brewing industry.
If passed, it would be the first successful attempt to increase in the beer tax in about 30 years. Currently, the tax is eight cents per gallon.
The bill for the tax is being sponsored in the House of Representatives by Rep. Jackie Dingfelder, D-Portland, and in the Senate by state Sen. Bill Morrisette, D-Springfield.
Morrisette said the money raised by the tax would be used for drug, alcohol and mental health treatment programs throughout the state, which have seen significant funding cuts since 2001. Programs are funded mostly through the state’s general fund, with some beer tax money and federal matching grants.
“What we’re addressing is the shifting of the cost from prevention and treatment to emergency room treatment, which is extremely expensive and passed on to insurance companies and other people who use the hospitals,” Morrisette said.
The tax would only apply to companies that produce more than 200,000 barrels a year, although that figure might increase to 250,000 barrels a year, Morrisette said. He said the limit is intended to protect the state’s microbreweries while taxing the larger beer companies, such as Coors, Anheuser-Busch and Miller.
“The money we get from that is going to be about $50 million a year, which sounds like a lot of money but that’s not even the beginning of what we need to fix our broken system of treatment and prevention,” Morrisette said.
In Lane County, beer and wine taxes contributed $188,000 to the county’s $733,000 budget for its five drug and alcohol treatment programs.
Tony Bieda, a legislative advocate for the county, said the county has an average monthly waiting list of 200 people for drug and alcohol treatment programs, with many waiting from 45 days to three months for treatment.
Bieda said Oregon counties and cities have felt much of the financial burden of dealing with alcohol and drug abuse. An increase in the beer tax wouldn’t mean that the county would have enough funding, he said, but it would be a “nice substantial boost.”
The Oregon Brewers Guild, which represents 43 of the 56 craft brewing companies in Oregon, has said it will lobby against the tax increase.
Brian Butenschoen, the guild’s executive director, said the tax sends a message that the state will put beer brewers out of business. It is also a disincentive to grow and expand, he said.
The tax would apply only to Widmer Brothers and Pyramid Breweries Inc., which produce more than 200,000 barrels a year.
However, breweries such as Deschutes Brewery, maker of the popular Mirror Pond Pale Ale, could also surpass the limit by next year, and the tax would hurt the company, Butenschoen said.
In early November, Portland-based Widmer Brothers, makers of Widmer Hefeweizen, announced a $22 million expansion that would nearly double its annual capacity to 550,000 barrels, The Associated Press reported.
“I don’t know that it would kill the microbrewery industry, but there would be no incentive to grow, at least in Oregon,” Butenschoen said.
Oregon ranks second in the nation for craft brewery production, he said.
Instead of increasing the beer tax rate to one of the highest in the nation, the Legislature should allocate more of the money collected from beer and liquor companies to find treatment programs, Butenschoen said.
“We feel that 10 cents a drink on a 12 ounce drink is not going to prevent anyone who wants to drink beer from drinking beer,” Morrisette said. “You don’t go into a bar and say, ‘I’d like to know how much the tax is.’ We feel that 10 cents a drink is a doable thing, it’s affordable and that’s what we’re shooting for.”
Butenschoen said the price is misleading because the tax would cause beer producers to raise their prices, which would cause distributors and retailers to raise prices.
In the past, attempts to increase the beer tax have usually failed in the Oregon House. The tax proposal is still being discussed and would require a three-fifths majority in both houses to pass, Morrisette said. If all else fails, he said, lawmakers could try the initiative route.
Butenschoen said he hopes that people will take a closer look at how the tax would affect the beer industry.
“Since we have a Democrat-controlled House, Senate, and governorship, if it’s something they really want to do, then they’ll do it,” Butenschoen said. “I would hope people would take a look at what’s proposed and think that it’s not really fair.”
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