Two Key House Committee Chairs Unveil Proposed Tax Increase on Beer and Wine

House Bill 3296 would generate hundreds of millions of dollars annually.

Oregonians haven't seen increases in beer and wine taxes in decades. A bill introduced earlier this week seeks to change that.

House Bill 3296, which sponsors are calling the Addiction Crisis Recovery Act, would add $70 to the current tax of $2.60 on a 31-gallon barrel of beer.

It would also increase the tax on a gallon of wine by $10 from the current tax of 65 cents per gallon.

In percentage terms, those are big increases: 2,600% for beer and more than 1,400% for wine.

Another way to look at it: Proponents say the tax would tack on about 21 cents to the retail price of a 12-ounce beer and about 31 cents to a glass of wine.

The bill has two well-placed co-sponsors: state Rep. Tawna Sanchez (D-Portland), chair of the House Behavioral Health Committee, and Rep. Rachel Prusak (D-West Linn), chair of the House Health Care Committee.

Both representatives have worked closely with Oregon Recovers, the advocacy group that has been pushing lawmakers and the Oregon Health Authority to increase beer and wine taxes to both reduce consumption and to generate nearly $750 million to pay for addiction treatment services, including 2,000 new treatment and detox beds.

In concert with the new tax proposal, OHA released a new report by the consulting firm ECONorthwest that shows excessive alcohol consumption costs Oregon $4.8 billion annually, about half of that sum from lost productivity.

Sanchez pointed to the impact of alcohol as a prime motivation for increasing taxes.

"I'm proud to sponsor the Addiction Crisis Recovery Act after four years of stakeholder involvement and methodical planning," Sanchez said in a statement. "The COVID pandemic has made Oregon's long-standing addiction crisis significantly worse. As we recover from the pandemic, it's critical that we adopt strategies to protect our families and increase prosperity."

The Oregon Beverage Alliance, which includes the state's brewers and winemakers, reacted strongly to the new tax proposal, pointing to the positive impact the alcohol industry has on the state's economy—a figure it pegs at $12.5 billion—and questioning whether the health authority needed new tax money.

"OHA has never even attempted to fund these programs through existing alcohol revenues collected by the state," the group said. "Don't put the cart before the horse, asking for increased taxes before developing metrics to measure success."

The alcohol industry has successfully fended off tax increases for years, leveraging the power of Oregon's homegrown producers and the fact that they operate in just about every legislative district.

"As local business owners and residents, brewers and winemakers care deeply about our communities," the group continued. "That's why we invest and create so many jobs here in Oregon. Without question, more needs to be done to address addiction, and we stand ready and willing to work with lawmakers and stakeholders on these issues. The resources are already there, we just need to use them better."

Tony Vezina, co-chair of Oregon Recovers, asked the industry to hold its fire.

"I publicly urge Oregon's beer and wine distributors to not lobby against ACRA," Vezina said in a statement. "For the better part of 40 years, they have made money hand over fist while Oregon's addiction crisis has led to tens of thousands of unnecessary deaths. Complicated problems require comprehensive solutions, and ACRA is just that: a comprehensive solution that will improve and save the lives of Oregonians in every corner of the state."

As a new tax, the bill requires approval by a three-fifths vote of both chambers to pass. It got a first reading Feb. 23 and has not been scheduled for committee consideration.

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