Oregon Beer Tax Hike Dead ... For Now
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A quick update on HB 3296, the crazy proposal to raise Oregon beer taxes I wrote about last month: it’s dead. The law would have increased the excise tax paid on a barrel of beer from $2.60 to $72.60, and raised wine from $.65 to $10.65 a barrel. Those numbers appear to be plucked from the ether, and the sponsors didn’t bother to talk to anyone before proposing the bill—especially those in the beer and wine industry. It was so ill-conceived one of two of the sponsors pulled her own support a few days ago.
Now the plan is to do the work that should have been done first—talking to stakeholders, assessing the actual need, and deciding what a realistic proposal would look like. As the Oregonian reports:
The lobbyists who pushed major increases in Oregon’s beer and wine taxes are asking the Legislature to set up a task force to design a new, more broadly accepted proposal that would fund addiction recovery services and lower alcohol consumption.
If approved, the task force would have until Nov. 30 to come back with draft legislation showing how the state could reduce alcohol consumption by 15% by increasing alcohol costs. It also would need to create a plan to fund additional addiction services.
That lobbyist is going to make this a hard pull. Mike Marshall, the head of Oregon Recovers, wants to cripple these industries. He sees them as a malignant force on society akin to tobacco, to which he regularly likens them. (This isn’t polemic spin; click through to my previous post or look him up on Facebook. Those are his views.) The task force will have to decide which among two goals new legislation should pursue: funding alcohol treatment at adequate levels and deciding what they cost the state, or targeting alcohol industries to vastly diminish their Oregon footprint. Given the task force’s stated objective to substantially reduce consumption across the board, good luck finding buy-in from alcohol industries.
This is an incredibly complex issue, and lawmakers are going to have to get honest about their goals given the starkly competing interests. Although wishing to reduce alcohol addiction and abuse is a worthy goal, Marshall and Oregon Recovers haven’t been honest brokers in this debate:
They’ve lied about what it will cost consumers, despite the stated goal to reduce drinking by making it excessively expensive;
They have understated how extreme this tax was (nearly double the next highest state’s, well over ten times the national median);
They have tried to argue it wouldn’t harm small, local companies citing no evidence;
They have blended the effects of drug addiction, repeatedly quoting a statistic about untreated addiction that includes drugs;
They cherry-pick statistics to make Oregon’s alcohol problems appear worse than average (they aren’t); and
They haven’t been transparent about the actual, public costs the state bears as a result of alcohol abuse.
Taxes are really tricky. Anyone wishing to learn more should listen to our podcast on the subject. Patrick Emerson, a university economist, walks through the complexities, including the important distinction between public and private costs (that is, much of alcohol’s cost isn’t borne by the state).
I’d ask legislators to consider the effects of such a tax and whether it would actually even accomplish its stated goal. Raising the cost of alcohol will certainly lower consumption (another thing Patrick touches on). But which consumption? Will raising the price of beer 30% deter alcoholics or the occasional drinker? It would certainly damage breweries, distributors, and pubs and restaurants. Would the loss of iconic local industries, a multi-million hit to the local economy, the loss of thousands of jobs, and the subsequent loss of state revenue be worth gambling that alcoholics would stop buying cheap vodka? How big a gamble are legislators willing to make that this is the right solution?
Backers floated this data-free proposal on the strength of scare tactics and anecdote. They liken alcohol to tobacco and transfer all the downsides from one to the other. Yet the two are in few ways similar. The vast majority of people who use alcohol do so infrequently and suffer no health problems. Whereas tobacco is uniformly bad for health, alcohol in small amounts is not. A large majority of tobacco users are addicts; a small minority of alcohol users are. These facts aren’t incidental—they are absolutely central to an honest discussion about how to address the actual harm of alcohol.
Public policy involves a series of trade-offs. We could reduce automobile deaths to near zero by lowering the speed limit to 20 mph. That’s effectively the logic behind HB 3296. Marshall’s laser focus on a single issue ignores everything else in the debate. And while he gets credit for having his heart in the right place, that’s not enough. The drys pushing Prohibition had identified real, tangible harm they were trying to address. Their single-mindedness blinded them to the ways their solution would fail to accomplish its goal and also cause massive problems along the way.
Good public policy addresses real problems effectively with few negative trade-offs. We live in a democracy and Mike Marshall can lobby the government to pass laws to cripple homegrown Oregon industries. But legislators who push laws to do that should understand what they’re doing.