Beer excise tax is too big a bite

TWO VIEWS • Is a beer tax a healthy way to fund needed programs and buoy a troubled budget, or will it cost us brewing industry jobs?

Toss a dime at someone, and it won't hurt.

Smack them with a 31-gallon bucket of dimes? That will leave a mark.

Oregon legislators want to raise the state's beer excise tax. They tell you it's only a 'dime a bottle.' It sounds pretty harmless.

What they aren't telling you Ñ but know full well Ñ is that an excise tax is not a user tax paid by the drink. It's a production tax paid by brewers and wholesalers before the beer is sold.

Oregon's excise tax on beer is $2.60 per 31-gallon barrel (about 330 bottles). A dime a bottle increase is a 1,369 percent jump to $35.60 a barrel.

I'll buy a beer for anyone who can tell me another industry in the state that is being asked to shoulder a 1,300 percent tax increase. Such an increase would give Oregon an excise tax rate five times the national average.

It's true that Oregon's excise tax is one of the lowest in the country. Oregon is a 'producer' state, meaning beer production is a key state industry. Ten percent of the beer consumed in Oregon is brewed in Oregon Ñ four times the national average for craft beer. Oregon brewers use Oregon-grown barley and hops and employ more than 2,600 workers, most at family-wage jobs. Tens of thousands of visitors come to Oregon each year to try our world-class beers.

On top of state excise tax, brewers pay $9 per barrel federal excise tax on the first 60,000 barrels and $18 per barrel thereafter, making taxes the most expensive single 'ingredient' in beer.

Under Oregon's three-tier distribution system, beer goes from brewer to wholesaler to retailer to consumer. At each step the price is marked up a set percentage to cover costs. A dime increase in the cost of producing a bottle of beer would grow to a 20-cent price increase by the time it hits the shelf.

Tax proponents say this is good because it will cut down on consumption, particularly among underage and problem drinkers. Underage drinking has been on the decline for years with no tax increase. Underage drinkers already pay a premium price to the legal-age buyers who furnish their alcohol. A $1.20 jump in the price of a six-pack won't stop them from drinking. It may steer them toward a cheap bottle of whiskey, once the price of a six-pack hits $8.50. Those addicted to alcohol will not stop drinking; they'll simply drink whatever is cheapest.

The tax will affect the habits of responsible drinkers who have families, mortgages and bills to pay. They won't be able to afford $8.50 six-packs of Oregon-brewed beer. Sales will drop. Jobs will be lost.

Tax proponents say 'sin' taxes on alcohol are necessary to pay the costs of alcohol and drug abuse. So why aren't we taxing high-fat and sugar-laden foods to pay the costs of heart disease, cancer and diabetes that result from overconsumption of these foods?

Many recent medical studies have said drinking one to two beers a day can cut the risk of heart disease, cancer and diabetes Ñ three of the top killers of Oregonians each year. The proposed tax would raise the cost of healthful beer consumption $146 per year. Is this a 'health tax?'

Legislators say they will exempt Oregon brewers from the tax, but the Constitution prohibits state-based exemptions. A production-based exemption is simply a stop sign, telling Oregon brewers, 'Don't grow your business; don't create new jobs.'

A dime a bottle? It just doesn't add up.

Jim Parker of Gresham is the executive director of the Oregon Brewers Guild. A native Oregonian and 'recovering journalist,' he has also been a brewer, pub owner and national brewers association executive.