Behind the bar at Taylor’s Bar and Grill, a sign lauds the affordability of a good time: “Beer: now cheaper than gasoline. So don’t drive … drink.”
With Oregon legislators’ sponsorship of a beer tax increase, the sign’s accuracy may be on the line.
The House Bill 2461 proposes a tax increase of 1,900 percent on all beer manufactured or sold in Oregon – an increase that could hit business owners and consumers’ wallets hard.
Free from tax hikes for 32 years, Oregon’s alcohol excise tax on beer sits at $2.60 per 31-gallon barrel. Oregon legislators sponsoring HB 2461 would like to impose the tax increase on all malt beverage products sold in Oregon. The bill would raise the tax on a barrel of beer from $2.60 to $49.61.
Legislators cite Oregon’s high alcohol consumption in 8th graders and high school students as a reason for passing the bill. Underage drinkers consumed an estimated $278 million in sales of alcohol in 2005, which was 15.3 percent of all alcohol sold in Oregon.
Money from the tax increase would fund treatment programs for drug and alcohol addiction. The Oregon Brewers Guild reports that only 5 percent of the current alcohol tax goes toward drug and alcohol programs.
“I’m against it,” said Justin Walker, manager of Taylor’s on 13th Avenue and Kincaid Street. “With the economy already in the shits, it’s going to impact us.”
Rep. Ben Cannon (D-Portland) co-sponsors the bill with four other Democrats and his office estimated that consumers would pay a tax of 15 cents per glass, but Oregon brewers disagree.
Jeff Althouse, co-owner of Oakshire Brewing in Eugene, said it would be impossible for producers to cover the tax in full without passing the cost on. Kurt Widmer of Widmer Brothers Brewing estimated that the consumer’s tax on a pint would be at least $1.50.
“It’s a journalistic fantasy to say that it’s 15 cents per bottle,” Althouse said, adding that the media coverage of the proposed increase misleads the public to see the tax as a menial sales tax, when the actual excise tax would be paid by industry businesses, as well as consumers.
Jamie Floyd, owner of Ninkasi Brewing in Eugene, said Ninkasi paid $19,000 in taxes last year, and the increase would raise its taxes to $370,000. The tax increase brewers would assume would inevitably be passed on to their distributors, retailers and consumers, he said.
The economic recession already affects Taylor’s, especially because its customer base is on a fixed income, Walker said, so the tax increase will only hurt business further.
“It can’t be a positive thing for the economy,” Walker said. “College kids are still going to do what they do, but (business) is down a little bit; it’s not as busy as it was six months or a year ago.”
Annette Lee, manager of Rennie’s Landing on Kincaid Street and 12th Avenue, could not confirm how the tax might affect her business.
University junior Nick Brooks said the tax increase would affect his ability to buy beer. If consumer prices raised, he would probably buy less beer, and shaking his head he said, “It’s ridiculous.”
Althouse said the tax would shut down Oakshire Brewing, which produces about 1,100 barrels a year. Ninkasi produced 7,800 barrels last year and while the tax would not put it out of business, Floyd said it would seriously affect the company’s ability to pay employees a living wage and benefits.
“We’re not getting rich, we’re just nice people trying to make a living and make a quality product in Oregon,” Althouse said.
“The current system works; the current system makes sense,” he said.
Paula Staight, director of the University Health Center, said alcohol is likely due for a tax increase and hopes the money would make a serious difference for alcohol prevention programs and accessible treatment.
“We are sorely in need of free treatment or very low-cost treatment programs,” she said. “Alcohol obviously takes a huge toll on the country on productivity, accidents, deaths, abuse and hospitals.”
Althouse recommended legislators use more money from the current tax to fund those programs that they say will benefit from the increase and said it is unfair to hold one industry responsible for citizens’ addictions to other substances.
“We’re paying for methamphetamine recovery,” Floyd said, “which doesn’t make any sense.”
Althouse and Floyd said only seven wineries in the state pay taxes because they are granted so many exemptions, while brewers already pay a number of taxes. The increased excise tax unfairly targets the beer industry, they said.
“Is it class warfare? Yes. It is class warfare to target the beer drinker,” Althouse said. “It’s irresponsible policy-making in my opinion.”
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