State legislators will likely introduce a bill today that would drastically increase the taxes on beer and wine to help fund state health services weakened by Measure 28’s failure.
The tax increases could occur as early as July if legislators are able to convince lawmakers that raising beer and wine taxes is a viable fix for health services left reeling by statewide cuts. Under the bill’s guidelines, taxes on beer would increase by 7 cents per bottle and by 15 cents for a fifth of wine — hikes that will almost certainly be passed onto the consumer.
The proposal, authored by Sen. Bill Morrisette, D-Springfield, and Rep. Jackie Dingfelder, D-Portland, would raise approximately $100 million for the Medically Needy program, drug and alcohol addiction programs and mental illness services.
“These are very critical programs that need to be funded,” Morrisette said.
Taxes on beer currently stand at less than 1 cent per bottle, while the tax on a bottle of wine is 13.4 cents. Morrisette’s proposal would raise taxes on beer to about 7.5 cents a bottle and wine taxes to 28.4 cents per fifth.
According to the Federation of Tax Administrators, as of January 2002, Oregon’s wine tax ranked 25th in the nation. Oregon’s tax rate on beer, meanwhile, was tied with three other states as fourth lowest in the country. If the new proposal becomes law, Oregon will have the second-highest tax on beer and the seventh-highest tax on wine in the United States.
“I think it’s a source of revenue that we haven’t tapped into,” Morrisette said.
Despite an apparent need to fund the crippled services, Morrisette said it will be difficult to pass the bill. The alcohol industry — from farmers to distributors — will likely oppose increased taxes. Nonetheless, Morrisette remains hopeful.
“I am cautiously optimistic because the time has come to do this,” he said.
The proposal would tax manufacturers of beer and wine; such increases would likely continue in a domino-like effect, however. Manufacturers annually producing less than 50,000 barrels of malt beverages would be partially exempt from the tax increase, as would producers of less than 100,000 gallons of wine.
But Kent Huey, vice president of Western Beverage Co., said such a plan is unjust.
“It’s an unfair tax — it is targeting a specific consumer which is totally wrong as far as taxes are supposed to work,” Huey said.
Oregon is a beer-producing state and, therefore, taxes on the product should be low, Huey said. The tax exemptions would likely not apply to Widmer, Deschutes, Pyramid and Red Hook brewing companies, he added. If the proposed bill were to pass, Huey said it would create a snowball effect and further hurt the economy.
“We just hope it dies on the floor,” Huey said. “We do not want to do this to consumers and we do not want (legislators) to do this to us.”
The tax increase could also raise consumer prices.
“In essence, you could see a $3 increase on a case of beer,” Huey said.
But such an increase is a small price to pay, according to others.
Lucy Zammarelli, senior manager at Willamette Family Treatment Services Inc. — Lane County’s largest addiction treatment facility — said people should realize that the money would go to help those who cannot help themselves.
“One of the things about the disease of addiction is that it isn’t a disease until it develops into one,” Zammarelli said.
Under the proposal, $43 million of the money would go to the Medically Needy program, which provides prescription drugs to low-income, senior and disabled citizens. Another $65.4 million would be matched for the Medically Needy program in the form of federal funds. The remaining $57 million would be distributed to counties within the state to help fund mental illness programs and alcohol and drug addiction services.
If approved, money from the proposal would go into the 2003-05 biennium. To become law, the bill must be passed by the Oregon House of Representatives, the Senate and Gov. Ted Kulongoski. In such a situation, the bill would go into effect in fall 2003. If Kulongoski were to approve the bill and present it to the state treasurer, the tax increase could begin July 1.
If such a plan is unable to gain support from state legislators, an initiative for similar beer and wine taxes could be circulated. If enough signatures are gathered, the initiative could then be decided by the state’s voters.
If passed, the increased taxes on beer and wine would be permanent, unless repealed.