Clown Cars Appear at Oregon Capitol—2,700% increase in Alcohol Tax Emerges

Proposing to raise the tax on beer and cider by 2,700% and raising it on wine by 1,500% (YES…between 2,700% and 1,500%!) is in and of itself comical. But it’s not a comically bad miscalculation by the sponsors of an Oregon bill that would do just this. It is the political equivalent of virtue signaling: Attempting to get credit for taking a strong position on, and making a bold proposal to address, an issue when there is little to no downside when it inevitably fails.

Oregon State Representatives Tawna Sanchez and Rachel Prusak are the chief sponsors of House Bill 3296. If passed, the bill would increase the excise taxes on beer and cider in Oregon from $2.60 per barrel (31 gallons) to $72.60 per barrel. The increase in the wine excise tax in Oregon would go from $0.65 per gallon to $10.65 per gallon. Moreover, the tax would increase each year based on the change in the consumer price index.

Representatives Prusak and Sanchez are concerned about addiction in Oregon and want more money for funding recovery efforts by the state. They and others were looking forward to suggesting a tax increase before last November’s election. However, their plans to use alcohol taxes to raise funds for recovery efforts were undercut by a ballot initiative that would dedicate any additional tax revenue from cannabis to be dedicated toward recovery programs. By some estimates, that ballot measure that passed in November will add $54 million to Oregon’s addiction and recovery programs.

So what are these two representatives doing introducing such an absurd bill that increases taxes on beer, wine and cider in such a comically monumental way? Why are they doing this now when they must know the possibility of it passing is close to zero? The bill will be opposed by the entire Oregon alcohol industry,  by the national alcohol industry, by the vast majority of state politicians, and by the vast majority of consumers.

Virtue signaling. Prusak and Sanchez want to show their supporters in the prevention and recovery world that they are willing to take on what they must surely refer to as “big alcohol”. But are they really taking on anyone? All they have to do is go to a committee hearing, make their speech about how alcohol will survive just fine under this kind of tax increase and that it’s the moral thing to do. Then, they wait as the bill is voted down in committee. Finally, they go back to their supporters in the Oregon prevention and recovery community and say, “look at us…aren’t we wonderful? Aren’t we fighting the good fight!”

But I want to focus your attention on what these two Oregon lawmakers and their supporters are proposing.

Based on the $0.65 per gallon Oregon excise tax, a winery paying excise tax on 5,000 cases of wine will pay $7,700 to the state in excise taxes annually. The supporters of the excise tax increase tell us that it will result in a mere $0.40 additional per glass of wine. That doesn’t sound too bad, right? But another way of putting that is the winery, instead of paying $7,700 per year to the state, will pay $126,000 per year under the new rate. An extra $120,000 out of the winery’s pocket. Do you see what I mean when I call this proposed tax increase comical?

But what about the Oregon brewer? Today, under the $2.60 per barrel excise tax, a brewer paying on 2,000 barrels of wine would remit $5,200 to the state. Under the proposed excise beer tax that same brewer would owe the state $145,200. This isn’t simply comical, it’s straight-up irrational and indefensible.

Beyond the undignified virtue signaling going on here with Representatives Sanchez and Prusak and their bill, there is also an element of them both being so completely out of touch with the world of business and industry that they somehow feel comfortable suggesting that a tiny, 5,000 case Oregon Pinot Noir producer can easily pony up an extra $100,000 in excise taxes. Do they not care about the fate of the owners? Do they not care about the jobs that will most certainly have to be cut by the winery? Do they not care about the kind of pain their clown car of a proposal will generate?

It appears not.

If you are an Oregonian (like me) and want to express your displeasure with House Bill 3296 and its sponsors’ comedy of errors misunderstood as policymaking, consider the following:

SIGN THE PETITION AT “DON’T TAX MY DRINK” OPPOSING THE BILL

EMAIL BILL SPONSOR REP. TAWNA SANCHEZ: [email protected]

EMAIL BILL SPONSOR REP. RACHEL PRUSAK: [email protected]

 

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6 Responses

  1. Elizabeth Schneider - March 1, 2021

    I have been beating the drum on neo-temperance for some time. In 2019 I did a podcast with Christopher Snowden an analyst from the UK who called out the Lancet for skewing data interpretation to make it appear that wine was as bad for your health as tobacco. Celebrities decry alcohol and say it is bad for your health, health nuts want high processed de-alc wine. Cancer warnings nearly went on wine bottles recently, despite the fact that we are talking about correlation, not causation.

    No one is countering the narrative in wine. That means pop culture can hammer at alcohol nonstop without the wine industry fighting the false claims or doing the research that used to be done to support moderate consumption as part of a healthy diet.

    Mark my words, this and climate change are the two most important issues facing wine. We’re paying attention to climate but this is the thing that could really tank the industry.

  2. Tom Wark - March 1, 2021

    Elizabeth,

    You are correct. You are absolutely correct. To date, there has been no effort as far as I can see beyond something ad hoc and internal to 1 or 2 beverage organizations to push back on the demonization of alcohol and wine in particular. This is most certainly a function of most people in the industry not believing the threat from the anti-alcohol organizations. You are right that this is an unadressed threat to the industry. It would take an effort by probably of small group of determined people to reach out to the industry, explalin to them the threat, monetize the threat, and ask them to support with dollars an effort to counteract that threat.

    Tom….

  3. Jim+Bernau - March 1, 2021

    Well written, thank you Tom. The extreme position the Bill sponsors have taken will produce a strong, at-ready defense, much more so than sensible funding options. The outcome of this tax proposal actually damages their cause instead of drawing community members together to find mutually agreeable solutions. Former Governor Ted Kulongoski, when running for office told us he would never propose such a tax to fund a General Government responsibility. His sensible leadership resulted in many long term solutions previously locked in mortal political and economic combat.

  4. Tom Wark - March 1, 2021

    Jim,

    The thing is, this kind of a tax increase doesn’t even make sense from a negotiating perspective. I get the idea of “ask for more than you want”. I’ve used that tactic a number of times. But there really is a limit to how high you can go withou losing all credibility. It’s unlikely these two lawmakers are unaware of this, meaning the proposed bill is neither serious, nor a negotiating position. They are trying to look good in the eyes of someone.

    I’m not opposed to increases in excise taxes. I think the alochol industry too often has a reflexive response to tax increases that not only does not make sense but is often detrimental ot the industry and the community. But this is something of a different calibre of crazy and deserves to be mocked.

    One thing that really gets me is when supposedly serious people refrain from anything that looks like good faith negotiations.

  5. Richard - March 1, 2021

    For almost 10 years I worked approximately 2-4 months per year in Oregon – most of that time was spent in Portland, but I also was able to travel the rest of the state. When I see Oregon politicians take these stances, I immediately think of a quote attributed to Margaret Thatcher: “The problem with Socialism is that you eventually run out of other people’s money.” Both of these politicians are from Portland or environs and one thing I can tell you is that almost every politician in Portland is completely out of touch with any form of reality – and I mean any form – on the “reality scale” with 10 being in touch with constituents and having one’s mind broadly based in reality, Portland politicos are at a minus 7 and their Clown Car is so large, it’s a “Clown Bus.” I bring this up Tom, because I disagree with you on the intent – I don’t believe these politicians are doing this so they can say they stood up to “big alcohol” but because they truly believe in what they’re doing – after having looked each up online (a dangerous proposition, granted) suspect they both fervently believe that wineries and breweries are the bane of all our existence and they should be taxed soundly as a form of punishment for inflicting addiction on their constituents… I don’t believe if asked, either of the two politicians would have any inkling of the damage this will inflict on most of the state breweries and wineries. Suspect many would simply have to go out of business. If it weren’t for the human misery it would inflict, perhaps the two should have their bill pass, when the wineries and breweries go out of business and their cash cow dries up, whose money will they go after next?

  6. Bob Henry - March 1, 2021

    Tom, if you wish to return to California . . . “we’ll leave the light on” for you.


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