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Tuesday, February 03, 2009

The Beer Tax is Back (and It's Worse Than Ever)

Every couple years, the beer tax rears its ugly head, and every couple of years sense prevails and it's killed. This year, however, is a whole different ball game:
1. The economy is in free-fall, and targeted taxes will be raised on minority constituencies. Across-the-board tax hikes may not be in the cards, but taxes on beer and cigs are very likely.

2. The GOP can't stop Dems from raising taxes.
I railed against this in the last session (see here for a general discussion, here for a philosophical discussion, and here for a rant against Steve Duin), so I'll skip that for now. I mainly want to alert you to the salient points that distinguish the horribleness of this year's harebrained scheme from last sessions (comparatively elegant and well-reasoned scheme).
  1. This iteration does not have an exemption for barrelage. Last session's exempted breweries that sold less than a certain number of barrels in Oregon (125k jumps to mind), but this tax would apply to every single barrel of beer sold in Oregon.
  2. The tax would represent a 1900% increase, the largest in American history, raising the excise tax on a barrel of beer to $52.21. The national average is $7.87.
In a nutshell, it would wipe out the Oregon microbrewing industry. Oregon Brewers Guild head Brian Butenschoen is on the case, so I'm sure we'll have more to discuss. Feel free to panic.

[Update. The text of the bill is here.]


  1. Do you know if this has any kind of broad legislative support or if the same person brings it up every year? Do you think our lame state government will refer this to the voters like they do every tough decision?

    I've got to think that a state that won't raise cigarette taxes to fund kids healthcare won't raise beer taxes.

  2. Do you know if this has any kind of broad legislative support or if the same person brings it up every year?

    It's a Democratic measure, and in past years the Ds didn't have the numbers to get it through. Two sessions ago, they didn't have the House and were tied in the Senate. Last session they had a majority in the House but not enough to pass spending measures without GOP approval. This year they have the numbers to push it through if the caucus stays together.

    It's sponsored by Reps Dembrow and Cannon and Sens Dingfelder, Morrisette, and Rosenbaum--lefties all.

    I've got to think that a state that won't raise cigarette taxes to fund kids healthcare won't raise beer taxes.

    This is the year the cig tax passes. Bet on it.

  3. Jeff - Your responses don't ease the mind.

  4. Heh. Yeah, I know.

    I'm urging panic.

  5. My rep, Jules Kopel-Bailey, specifically campaigned against raising beer taxes when running in the Dem primary (against Rosenbaum's CoS, Regan Gray, who favored them iirc). In fact, it was one of his few differentiators in a primary with three great lefty Dems. If all we need is one Dem vote, it seems like we should be able to lean on Jules.

  6. Is the tax on only beer produced in Oregon? or all beer sold in Oregon? Where can you read up on it more?

    Need we start a Save the Ales campaign?

  7. I've updated it in the post, but the text of the bill is here

  8. Damn those Oregonian 8th graders. I blame them for threatening my micros!
    If they'd stop skipping class to drink bottles of Abyss in the bathroom this wouldn't be a problem.

  9. "$4.15 billion in lost earnings"

    How the hell do they come up with that figure, especially since it accounts for over 80% of the total cost to society.

    "Whereas underage drinkers consumed an estimated 15.3 percent of all alcohol sold in Oregon in 2005, totaling an estimated $278 million in sales and estimated profits of $135 million to the alcohol industry."

    I'd be willing to be that less than 1% of that $135 went to Oregon brewers.

    "Whereas raising the malt beverage tax and indexing those taxes to the Consumer Price Index to keep pace with inflation is imperative to protecting Oregon's citizens"

    So just bring the current tax from the 70s into 09 dollars.

    "Moneys in the Alcohol Impact Remediation Fund are continuously appropriated to the Department of Human Services to be distributed in each calendar quarter as follows:..72 percent for treatment of alcohol and drug addiction..."

    So now brewers have to pay for meth addiction?

    Taxing something causes less of it to happen. Creating/enlarging government agencies based on a funding source that will necessarily diminish is stupid. I also think that if you're going to fund alcohol prevention wine and spirit producers should be included as well. My guess is that those taxes are coming since this feels like a divide and conquer play. Wine drinkers may not care because it doesn't affect them now, but they'll be next when the money from taxing brewers goes away and the government needs money to maintain and increase its size.

    What can we seriously do to stop this?

  10. Derek -- the tax will be levied on all beer sold in Oregon. So here's an example of how the tax would boost the tax bill of a few Oregon brewieries (based on 2008 in-state sales estimats):
    New Old Lompoc Brewery: from $5,330 per year to $107,030
    Hopworks Urban Brewery: from $7,857 to $157,778
    Ninkasi Brewing: from $18,460 to $370,691
    Rogue Ales: from $34,091 to $684,577
    BridgePort Brewing: from $60,315 to $1,211,167
    Deschutes Brewery: from $215,990 to $4,337,241.

    Scary indeed

  11. This tax sounds like a brilliant idea.... If the state wants all the breweries to close and lose all those jobs! Plus, their revenue!

    Who do we have running this state, Barney Fife and Goober??

  12. this is why I vote libertarian... keep the the government out of the private sector.

  13. Just another crusade, courtesy of those who misunderstand what Oregon's beer culture is really about. The preamble to this tax is full of interesting information that relates to alcohol AS A WHOLE. If one were to isolate the "Oregon-beer-only" drinkers from the "everything-else" imbibers, I'm reasonably sure that about half of an 11th grade classroom will probably still get drunk this weekend. Y'see, Oregon brewers are not targeting kids.
    They might show that families can go out together to a brewpub and that the parents can enjoy the beer, however the kids are being exposed to responsible alcohol use. The notion that local beermakers need to shell out $$$ for damage brought on by a majority of abusers NOT using their product should be laughed out of the capitol.
    Oregon and Colorado have low taxes on beer, and as a result those two states have been able to develop the most impressive microbrewing industries in the country (my opinion, anyway). A 1900% increase would be DEVASTATING to our local economies, and following years would see fewer breweries to pay these taxes. Result- less revenue to the state and fewer jobs in the state. Doesn't even seem worth debating.

  14. I made some comments about this article at my blog.. I think it's worth the read for your entertainment.

    I saw this article as it was posted at of which I am a member... drinking the finest!


  15. i am all for this tax - CHILDREN are drinking and so are meth ADDICKS. someone needs to PAY for them so why not you beer-drinking ALCAHOLICS? it's time you all tried and gave something BACK TO YOUR COMMUNITY!!


  16. OK, Senator Dingfelder (MomsAgainstBeer), we all know how you feel. Now get back to work at the Capitol.

  17. Yes... I drink one to two pints a day of quality craft beer. That makes me an alcoholic according to momsagainstbeer. That's the biggest nonsense ever! Companies like Bud and Coors promote mass consumption of their beer, why not tax them and leave the craft beer to the people. The local brewpubs are promoting the positives of a community based watering hole that are healthy environments for everyone. Why should we punish the brewers and the consumers.

  18. I have a pretty strong sense MomsAgainstBeer is a joke post. Not that there aren't folks out there with this view.

  19. Actually it reads like the numerous e-mails and letters I used to receive when I worked for the Oregon Brewers Guild and would testify against tax increases or be quoted in the press about them. Those folks do exist.

  20. I do not think the 8th graders are drinking craft beers... more like Bud. If the state wants to raise money to pay for programs that would reduce teen drinking why not charge the tax just on 'imports' (like Budweiser or Coors)?

    By the way, I think the person that posted under 'momsagainstbeer' is a crack addict.

  21. What truly amazes me is the powers that be try to enact this ridiculous tax every year. Will they ever figure out this tax is counter-productive? The reasons for the tax simply do not hold water. The result will only hurt the Oregon craft brew industry. Where is the value in that? There is none. I enjoy drinking fine craft brews... Oregon legislators - please stop trying to ruin that experience for me.

    PS - 'MomsAgainstBeer' cannot be for real (or she would not be on this site).

    PSS - I think 'Saucy Wench' is hot (whoever she is).

  22. It is quite obvious the legislators in Oregon do not enjoy the fine micro-brews available in the grand state of Oregon. If they did, they would not try something so stupid as to attempt taxing them out of business. Get a clue... sit down and enjoy a tasty Oregon micro-brew and you'll do the right thing.

  23. It's distressing to see that Sen. Rosenbaum is a sponsor. She has 5 small breweries in her district: Lucky Labrador, Roots, Clinton Street, Hopworks, and Philadelphia's.

  24. This is an eamil I just sent my state senator:

    Senator Rosenbaum,

    I am greatly distressed to see that you are sponsoring the above bill. As my representative in the Oregon Senate you must surely know that our district has several small breweries that would be greatly affected by the passage of this bill. If the increased tax burden does not put these companies out of business, it will certainly lead to job losses. Those losses would not only cause income tax loss that goes to the general fund but would also increase demand for services provided by the State, both of which would only further strain our woefully under funded budget. Projected out to the thousands of people employed by the Oregon craft brewing industry and it is easy to see that this bill will do serious economic harm to our State.

    I applaud your desire to reduce the social cost of underage drinking and alcoholism but you are asking for those not responsible to pay a heavy price. Underage drinkers do not spend $8-$10 on a six pack of craft beer; they pay the same amount or less for a 750ml bottle of vodka. Underage drinkers are not going to brew pubs where trained staff enforces ID checks before serving patrons. Threatening the existence of the Oregon craft beer industry and asking it to foot a bill it is not responsible for is absurd.

    Your sponsorship of this bill make it clear to me that you lack a simple understanding of the effects of taxes and the true source of our societal ills. As such I will not be voting for you or anyone else that supports this bill in the future.


    I'm not sure what else to do, I've considered starting a Facebook page as a public pettition against this bill. Any other thoughts?

  25. What can i do about this? Is there someone i should a write a letter to?

  26. This is just disgusting. I just saw a report on the news and I was yelling at the TV. How could anyone possibly entertain this crippling idea in a state that has over 70 breweries and is a lynch-pin in the NW brewing industry? And it's to help pay for people with drug and alcohol problems, to boot! This would RUIN the Oregon brewing industry.

    What can I do as an individual to help make sure this does not go through? There's nothing about it on the OBG site.

  27. Oregon's beer tax has been frozen at 3/4 penny per 12-ounce container since 1977. A 15-cent-per-drink increase could provide more than $60 million a year in targeted funds for substance abuse prevention, and treatment and recovery programs. $900 million of your state dollars are paid into human services each year because of alcohol and other drug problems. It's time the beer indusry pays its fair share of the social and economic cost of its products...goes for those of us who drink beer too. Think of these pennies as future treatment and recovery insurance.

  28. Why should Oregonian responsible drinkers foot the bill for those who can't show some restrain? Make those responsible for such to foot the bill. It would appear to me that such measures are to kill the beer industry, to target a broad group of reasonable adults for stupid teenage drinks is insane. Why not put the responsibility back on the parents who breed these moronic cloned hell spawn of the parents.

    As far as "treatment" the only treatment they need is imprisonment, and we can solve the cost issue by making inmates produce goods to cover their costs, not to pay them. If they produce goods and they aren't serous criminal offensives they can earn their way out of jail by proving they can be productive members of society again.

  29. I never got the idea that a person who enjoys a beer or a glass of wine should pay for the people who are alcaholics and drug addicts. Does someone who enjoys an ice cream sandwich then pay an excise tax going to heart patients?

    If additional income is needed, it should be a general tax across the whole population. That way the amount will be small and not so disruptive. I hate how the politicians decide that taking tax out of your back pocket is different than taking it out of your front. You know how many pockets they take it out of? More pockets than you have.

    This is just like the luxury taxes they had which they needed to recind because of the jobs it cost.

  30. It seems if beer became so expensive, some folks would gyrate to well drinks....a bit more potent and potentially dangerous.