Oregon Legislator Proposes Raising Beer Tax 1800%

February 19, 2009

You know tax news has hit mainstream when the Weekly World News is doing a parody of it.

Oregon’s beer tax is one of the lowest in the country, so therefore a legislator thinks it should be raised. Currently at roughly 8.387 cents per gallon ($2.60 per 31-gallon barrel), the proposal on the table is to hike it to $1.60 per gallon ($49.61 per 31-gallon barrel). This would take Oregon from 45th highest beer tax among the states to by far the highest in the country. (Alaska currently has the highest, at $1.07 per gallon; click on our updated beer tax map to the right.)

The sponsor, however, indicates that he’s “open” on the tax rate. Excise taxes are punitive taxes on a product above and beyond the tax imposed on all products. They are only justifiable if there is some cost imposed on society that is not already paid by users. It’s hard to see how legislative negotiations will result in this optimal tax rate. And while the proposal now has all the money going for alcoholism-prevention programs, that is also up for negotiation. As with other things, this is just a revenue grab from one group of people who can be fleeced.

Or maybe not. Beer taxes are incredibly unpopular; a beverage tax increase in Maine recently was repealed in a public vote. It’s an open secret in state tax circles that politicians have greater success raising liquor and wine taxes, since they don’t hit a majority of voters. It’ll be interesting to see what develops with this Oregon proposal. (Also check out our blog post on the Idaho proposal to raise the beer tax by 246% and the federal bill seeking to cut the 58-cent federal beer tax in half.)

The Oregon Daily Emerald is pretty eloquent in their editorial:

We understand alcohol can be a serious drug, and alcohol addiction is a serious disease that can result in emotional trauma, accidents, bankruptcy, serious medical problems and death. We recognize the costs alcohol might have for our communities in terms of drunken driving and underage abuse. But penalizing legal and responsible beer-drinkers just because a tax is an easy way to close state budget gaps is not a fair or efficient way to address these problems.

Lawmakers are practicing the worst kind of cowardice. They know we have to increase taxes or cut back government services to cover costs. Instead of accepting this reality, they seek to save voters from their responsibility to pay for the services they get by shoveling the costs onto the ol’ saloon drinkers in some Calvinistic fixation on the devil-juice. These “sin taxes,” such as the beer tax, are intended to discourage “sin” behavior, like drinking. But this line of reasoning is outdated and hardly a legitimate justification for government policy.[…]

In short, it’s time for the lawmakers in Salem to grow a pair and tell the truth about what it costs to run a government. They need to stop shoving off all their costs onto the “easy” taxpayers. Craftbrewing is an important industry for Oregon, so word to Salem: Lay off our beer.

Here’s a CNN piece on the proposal:

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