The 2009 Beer Tax: Daid

Well, it's happened once again--the latest version of the beer tax has died of asphyxiation. As a historical matter, this is hardly new: every couple years, someone proposes a new beer tax, and every couple years, it gets shot down. However, I see some signs that things may be changing. You can see evidence of this shift in the obituary Janie Har wrote in today's Oregonian (I'll highlight the interesting bits):

[Rep. Ben] Cannon [D-Portland] had originally proposed raising the privilege tax on beer from $2.60 a 31-gallon barrel to $49.61.

His latest proposal, with Sen. Floyd Prozanski, D-Eugene, would raise the tax to $5 a barrel for smaller craft breweries and $23 for big beer makers that pump out more than 2 million barrels a year. That would raise about $85 million every biennium for public safety and alcohol and drug treatment. (Each barrel contains about 330 12-oz glasses or 248 16-oz. pints.)

When this year's debate commenced, Senator Cannon made a few key mistakes with HB 2461: he treated all beer the same way, making no exemption for small local brewers; he started the tax out at a rate far in excess of the current highest state tax in Alaska and twenty times the current rate; he used language in the bill accusing brewers of sins ranging from teen consumption and death to child abuse. In service of the bill, he also used language I found frankly dishonest, characterizing the tax as a per-glass hike.

As the Janie Har piece demonstrates, we are not where we started. Cannon has addressed most of my own concerns: the current proposal is much more modest; he treats small local breweries differently; he devotes the money to public safety and drug and alcohol treatment; he's dropped the phony language. Now we're talking very clearly about a tax on breweries and how the revenues will be spent.

This is a bill I could support. I would prefer and exemption on the tax hike for a certain number of barrels sold in Oregon--say 50,000--and then a tax of $8-$10 per barrel on all remaining sales. This would treat all breweries fairly but still give the smaller players a little breathing room. The problem with this proposal is that it creates two classes of breweries, and this seems a little funky. More importantly, by putting the tax at $23/barrel for big breweries, Cannon invites a huge fight: that would make Oregon the 5th-highest in the country. Paul Romain, the famously powerful big-beer lobbiest, would certainly have something to say about that. But I could live with and would support the bill as Cannon describes it.

No doubt we'll be talking about it again in due course...