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Monday, February 05, 2007

Beer Taxes Introduced

This is probably more appropriate for BlueOregon, but Dems have introduced two versions of beer taxes that won't thrill breweries:
House Bill 2535 would increase the tax by about 10 cents per drink for large beer manufacturers. Right now, the tax is one of the lowest in the country, penciling out to less than 1 cent per drink. The proposal would exempt smaller home-grown breweries.

Senate 502 would eliminate Oregon's beer distributor trade laws, which the legislators call "sweetheart" protections for the middle men. It would also allow grocers to use credit to pay for their beer deliveries -- a provision they've wanted for years from Salem. Rob Bovett, president of the Oregon Alliance for Drug Endangered Children, said he wants lawmakers to combine the two bills as a way to get retailers on board with a beer tax increase.
Beer taxes are generally worrisome to breweries, because they cut into already razor-thin margins (at three fifty a pint, the retail value of a keg is nearly $900, but a brewery makes around a hundred). The first bill affects breweries producing 125,000 barrels or more, which is fairly low--within a few years, as many as four Oregon breweries could be producing that amount. The Senate bill isn't online yet, so I haven't seen whether it would rectify the power imbalance distributors enjoy. Let's hope.

Update. The senate bill is now up, and it's no clearer. Here's a summary:
"Repeals laws relating to required contracts between suppliers and wholesalers of alcoholic beverages. Eliminates statutorily mandated exclusive territories for wholesalers of alcoholic beverages. Repeals other laws governing relationship between suppliers and wholesalers of alcoholic beverages."
Inside info? Do tell.


  1. The bill seems pretty clear that it's designed to both raise the price of cheap beer to decrease consumption and to raise funds to pay for the cost to the state (i.e., us) of alcohol abuse. I'd say that's better than paying for it with my income or property tax.

    Although, it is a bit misleading to say:

    "Whereas Oregon collects only $1 of alcohol tax for every
    estimated $39 of alcohol-related health care costs;"

    when the majority of that cost is covered by private insurance, not the state. I'm sure that the actual cost paid by various governments is some significant multiple of of the actual tax on beer, but not 39. Whatever that number is, I'm all in favor of fully covering it with the tax, even though I have to pay it.

    One thing that is good about it is that it's pegged to the Consumer Price Index, so any legislative action which increases it is definitely a hike and not an inflation correction.

    Thanks for the link to this.

  2. Currently, beer distributors have a monopoly in Oregon. There is no competition and no chance for a retailer to try and find a better price or a better delivery company. If you live, say, in Portland, then you must buy your beer from one set distributor that has exclusive rights to their brewers. Now, I am not sure of this part, but I think the OLCC dictates how much the brewer has to sell their beer to the distributor for, and in turn, how much the distributor has to charge the retailer(please clarify that part if someone knows better).

    This part I am sure of; A little convenience store pays the same price for a case of beer as the largest retailer does. So, Fred Meyer(or whoever else) gets no volume discount on beer for buying a million times more than Joes' quikky mart(or whoever else)... good or bad, I am not sure...?