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Tuesday, June 09, 2009

Ben Cannon Speaks (About the Beer Tax)

Second-term Representative Ben Cannon has a fascinating post on BlueOregon this morning. He is, as many of you will recall, the sponsor of the latest version of Oregon's perennial (and perennially-defeated) beer tax. In the post, he describes the lessons he's learned trying to push this through. I'd say the whole post deserves a read, but I'll distill the post here, in case you'd like to continue a discussion we've had for lo these many months.

1. "Whereas" clauses matter.
Like many bills, House Bill 2461 includes a preamble consisting of a series of "whereas" statements (e.g. "Whereas addiction is defined as a chronic, relapsing brain disease that is both preventable and treatable")... The tone left some brewers and beer enthusiasts, the vast majority of whom consume beer safely and responsibly, feeling defensive about their product -- before they even got to the legal meat of the bill.

2. I get to set my legislative priorities, but not the level of attention those priorities receive.
As my legislative priorities go, raising the beer tax has not been at the top of the list. I ran for the Legislature with an interest in education policy, health care reform, and reforming our unstable and inadequate system of public finance.... Yet the beer tax has drawn far more public attention than any other issue I've worked on in three years. In retrospect, I should not have been surprised. The media loves tax proposals and finds this one, with its everyman impact and moral innuendo, particularly irresistible.... When we introduced the bill, I wasn't sure it would even get a committee hearing. Six months later, I have had to spend more time defending this proposal than any other.

3. Fifteen cents was too high.
This is a tough one to acknowledge, but it's true. If beer taxes were applied at point of sale, I have little doubt that beer producers and drinkers could easily withstand a fifteen cent increase in Oregon's less-than-a-penny beer tax. But beer excise taxes are paid by breweries (for beer brewed in Oregon) and distributors (for beer imported from out-of-state).

4. Beer taxes are marked up to the consumer, by about twofold.
Research about the impact of beer tax increases in Alaska and other states, published by the National Tax Journal and the National Bureau of Economic Research, concludes that beer taxes are marked-up, on average, by a factor of about two. In other words, raising the excise tax by 15 cents increases the price of a bottle to the consumer by about 30 cents -- after middlemen have taken their cut.

5. Beer is an important part of the cultural and economic fabric of Oregon.
Well, duh.... They're a major source of civic pride. But to be honest, until this experience, I did not have a full appreciation for the passion that many Oregonians have for their beer, not to mention the number of people who work in the industry.... In drafting the legislation, I focused on the fact that 80-90 percent of Oregon's beer tax revenues are generated on large, corporate, out-of-state beers. The remainder is a small percentage of the total, but it is still a huge industry for this state.

So have I changed my mind about raising the beer tax?
Absolutely not. The facts remain: Oregon hasn't raised its beer tax in more than 30 years. Ours is among the very lowest beer taxes in the country.... But I have tried to apply the above lessons to a new version of the tax. My colleagues and I have worked on an amendment that would raise the tax to 1.5 cents on beer from "small" breweries (ones that meet the federal definition of under 2,000,000 barrels per year, including every brewery in Oregon). For beer from large, out-of-state breweries, it would go higher; say, 5 or 7 cents. We would dedicate the revenue (somewhere in the range of $80 million per biennium) to public safety and addiction treatment. (And we strike the "whereas" clauses!)

As you can see, Cannon has made two major concessions here: he's admitted that the tax was way too high and that the per-glass figure he used to sell the bill was based on a faulty calculation. It's admirable for a legislator to offer a "lessons learned" post on a bill that didn't make it. Again, you should read the whole thing if you're interested.


  1. not that I want any beer tax increases this seems a little more reasonable. It makes more sense to raise taxes on the large, out of state breweries, like coors or bud or miller.

    "My colleagues and I have worked on an amendment that would raise the tax to 1.5 cents on beer from "small" breweries (ones that meet the federal definition of under 2,000,000 barrels per year, including every brewery in Oregon). For beer from large, out-of-state breweries, it would go higher; say, 5 or 7 cents."

  2. Jeremy in SE PDX4:07 PM, June 09, 2009

    Alworth's my rep, and even though I voted for him last time, I was considering giving money to ANYBODY who would run against him (Mannix? Stalin? Sure!) next time I was so mad about this beer tax proposal, but I think I can live with this. Maybe we could push for some sort of protectionist legislation, heh. 100% markup on non-Oregon beer, anyone?

    I gotta say that I think this is pretty admirable. I don't see most people, much less politicians, do this sort of thing very often, and it makes me like the guy.


  3. he's my rep and a great guy

  4. I am delighted that I'm not your Rep, Jeremy (or anyone's). I don't envy the politicians their work, especially this year. If called, I will not serve...

  5. Jeremy in SE PDX11:16 PM, June 09, 2009

    Ha! I agree, Jeff. It's got to be brutal and thankless. I wouldn't want to be my rep either.


  6. Jeremy in SE PDX9:01 PM, June 10, 2009

    Bwaw, I'm so daft that it wasn't until driving home this evening that for some reason I suddenly realized I had substituted Jeff's name for Ben Cannon's.

    What a maroon!