The latest iteration of a bill that would hike tax rates for Oregon beverage-alcohol producers was introduced in the state House of Representatives last month.
House Bill 3312 (H.B. 3312) would raise taxes on beer and cider produced in the state from $2.60 per 31-gallon barrel to $33.60 per barrel by 2028 – a 1,200% increase over half a decade. Taxes on wine would increase from $0.67 to $4.42 per gallon. The amendment that spells out these details was leaked to Willamette Week and has not been introduced yet.
The bill was introduced on February 21 and referred to the behavioral health, healthcare and revenue committees on February 23.
If passed into law, Oregon’s new tax rate of $1.08 per gallon would be the second highest in the country, surpassed by only Tennessee ($1.29 per gallon).
At $0.08 per gallon, the state’s existing tax rate for beer is among the lowest in the country, according to the Tax Foundation. Only Colorado and Pennsylvania (both $0.08 per gallon), Missouri and Wisconsin (both $0.06 per gallon) and Wyoming ($0.02 per gallon) tax beer at less expensive rates.
“Oregon’s breweries, wineries, cideries, distilleries, restaurants, bars and hospitality sector are facing major challenges,” Oregon Beverage Alliance (OBA) wrote in a press release. “Between inflation on the cost of ingredients, supply chain issues, employee shortages, natural disasters and a pandemic, these local businesses need the support of lawmakers and the public to survive. The last thing any local business needs are the tax increases proposed in House Bill 3312, which would increase taxes on beer and cider by 1,200% and increase taxes on wine by more than 500%.”
The OBA is an advocacy group consisting of 78 members, including craft breweries, wineries, distillers, distributors, ingredients suppliers and trade groups. Its members are among Oregon’s 400 breweries, 1,000 wineries, 1,300 vineyards, 70 cideries, 65 distilleries, 73 distributors, 10,000 restaurants and 37,200 farms, according to the group. These businesses generate “hundreds of thousands of good-paying jobs and more than $14 billion in economic activity for the state,” the OBA wrote.
“With the highest cost increases in generations, tax increases would only make it harder for these local businesses to invest in hiring and expansion,” the group added.
Oregon’s breweries produced 897,473 barrels of beer in 2021, ranking it ninth in the nation and six in gallons per legal-drinking-age adult, according to the Brewers Association (BA).
In 2021, a bill was introduced that would have raised taxes on malt beverages to $72.60 per barrel, but was never adopted. Beverage-alcohol industry advocates are confident lawmakers will be on their side this time too.
“We don’t believe that even at half of the 2021 proposal it will have the votes to pass,” Oregon Brewers Guild (OBG) executive director Christina LaRue told Brewbound. “But, that being said, there are a number of newly elected legislators who may not be as familiar with our industries or the economic impact we have within the state.
“We are currently meeting with folks on both sides of the aisle, sharing our stories, and reminding them that less than 3% of the revenue Oregon alcohol brings into the state via current taxes and distilled spirit sales is being funneled into recovery and addiction services,” she continued. “Before considering raising our taxes, they should be evaluating how the 57% that is funneled into the state’s general fund is being used and the potential for reallocating funds into the needed services.”
Both the failed 2021 bill and H.B. 3312 have the backing of Oregon Recovers, a public policy group fighting addiction.
Oregon Recovers and the Oregon Alcohol Policy Alliance counter that raising taxes on alcohol would help raise $177 million annually by 2023 to fund addiction treatment services and education, according to Willamette Week.