The burden of taxation

The craft brewing industry has been good business for Oregon. This entrepreneurial industry of about 90 breweries – which is built on uniquely Oregon advantages such as agriculture, people, and lifestyle – contributes USD 375 million to the Oregon economy every year. It does this without receiving state tax breaks or subsidies, while continuing to pay tens of millions of dollars in existing excise taxes.

The proposed 1,900 percent tax increase – from the current tax of USD 2.60 a barrel to USD 52.21 – would be the single biggest tax increase on beer in U.S. history, giving Oregon the dubious distinction of having the highest beer excise tax in the country.

Brewers fear that costs would have to be passed on to beer drinkers and would raise the cost of a pint by up to USD 1.50. The price of a six-pack could go up between USD 2.50 and USD 4. These days, a six-pack can set you back USD 10 already.

Proponents of the tax hike, five lawmakers – four from Portland and one from Springfield – say that the tax will pay for drug and alcohol treatment programmes. They argue – on rather dubious claims – that Oregon’s untreated substance abuse costs USD 4.15 billion in lost earnings, USD 8.13 million for health care and USD 967 million for enforcement and social services for a total cost of USD 5.13 billion each year.

The House Bill still has to meander through the legislative process and it could be a while before it becomes law – if it ever does. According to media reports, the tax has not been raised since the 1970s but not for a lack of trying. The issue crops up regularly, but so far lobbyists and the beer industry have defeated every attempt at raising the tax.

However, brewers take this tax proposal very serious and are putting their efforts into a well-coordinated campaign to defeat it.