Lies, Damn Lies, Statistics, and Beer Taxes

Posted on: March 5th 2009

As our country and state fall further into financial chaos, large gaps are left in state and federal budgets and our elected leaders are challenged for ways to deal with them.  Historically, they have turned to “so-called” Sin Taxes, taxes on tobacco and alcohol.  I won’t deal with tobacco here because while alcohol can be abused, when consumed per manufacturers instructions (moderately and responsibly), alcohol causes no harm and there is ample scientific evidence it may actually contribute to a healthy lifestyle. (Duhhh!)
In Oregon, as in some other states, legislators have decided to target the beer industry (not wine or spirits or junk food or Britney Spears, just beer) for a significant increase to the excise tax on beer.

Excise taxes are taxes assessed at the point of manufacture or import.  The tax proposal in Oregon would affect all beer sold in Oregon regardless of where it is produced.  It would not affect beer we produce and sell out of state. (Those state’s excise tax would be assessed upon our beers importation into that state.)  The key here is where do you sell most of your beer?  For Deschutes Brewery, we sell half of the beer we produce in Oregon so we have a much larger exposure to heavily taxed beer should the current proposal pass.  Other Oregon brewers sell ALL of their beer in Oregon.  This places them at a significant disadvantage when competing with out of state companies that can average costs over a broad range of territory.  What it really means is that Deschutes Brewery’s state excise tax bill would go from $220,000 to $4.5 Million!  If you think that will only amount to 15 cents per beer, you should think again.

Oregon’s craft brewing industry did not exist 25 years ago.  In that time, the industry has grown to the healthiest in the nation.  The percentage of craft beer sold in Oregon (that is made in Oregon) is more than double that of the next highest state.  Portland (also known as Beervana) has the most breweries of any city in the world.  The reasons for this are many.  Among the most important, though, is the relatively advantageous excise tax environment we enjoy in Oregon.  (We say “relatively” because all excise taxes are inherently regressive and unfair, but we do compare favorably to our neighboring states**).

If we were to suggest to the legislature that we could provide in 25 short years a new industry that would provide 5,200 family wage jobs, would be clean, green, very involved in their communities, popular with Oregonians and provide an attraction for visitors that would exceed the state’s wineries, companies would forego any tax breaks plus agree to pay tens of millions of dollars for the privilege of doing business in Oregon, what would the legislature say?  Yet, that is exactly what we have done.  Meanwhile, the legislature has provided millions to California’s film and TV industry to try and lure them here so they can take their dollars back to California.  (Make no mistake, California needs those dollars!)

Oregon’s brewers have been accused of misstating facts and being pawns of the large international brewers.  Meanwhile no one seems to want to question the “facts” alleged in the legislation itself, or the motives of its authors.  Our motives are clear.  We must protect our industry, our companies, our co-workers and our communities.  We know there is no amount the tax can be raised that will not damage all four, to say nothing of what a 2,000% increase will do.  In this economic climate this is truer than ever.

So, who is really manipulating who?

Tell your legislators, Don’t tax my beer!

For more information on how to fight for what’s right, go to:

** Excise tax rate per barrel
Oregon $2.60
Washington $8.06
California $6.20
Idaho  $4.65
Wyoming  $0.62
Montana  $4.34
Missouri $1.86 (home of Anheuser Busch)
Wisconsin $1.86 (home of Miller)
Colorado $2.48 (home of Coors)

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