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Massive beer, wine tax increase is a mistake

Alcohol abuse and dependence is a big problem in Oregon. More treatment opportunities would help address that. But paying for treatment beds at expense of Oregon’s beer and wine industry is the wrong way to go about it.

House Bill 3296 would increase the tax on a 31-gallon barrel of beer from $2.60 to $72.60. That’s nearly a 2,700% increase. Wine taxes would rise from 65 cents per gallon to $10.65 — more than 1,500%.

The bill would raise an estimated $750 million for addiction programs, including

2,000 new treatment and detox beds.

There is no question that the state’s treatment services are woefully inadequate. Oregon Recovers, an advocacy group that helped craft the bill and supports increased state investment in addiction treatment, wants to see the measure pass to reduce alcohol consumption as well as fund treatment.

That’s a popular way to generate support for so-called “sin taxes”: If the state increases the price of cigarettes and alcohol by taxing them heavily, it will discourage people from consuming things that are bad for them. The paradox, of course, is that the less people consume, the less tax revenue the state will collect.

Industry sources say the proposed tax increase would raise the price of a six-pack of craft beer from $11 to $16, and the cost of a bottle of wine by about $2.

The bill’s supporters say the pandemic has increased alcohol consumption and abuse. That may be true, but it has hit the brewing and winemaking industries hard, too. The Beverage Alliance, and industry group opposing HB 3296, says the state was home to 400 breweries, 900 wineries, 1,200 vineyards, 100 cideries, 65 distilleries, 73 distributors and 10,000 restaurants before the COVID-19 pandemic hit. Many of those businesses have gone under.

Oregon is known for top-quality craft beers, and wines that are now favorably compared to older, more established wine regions. And it’s not just Willamette Valley pinot noir. Southern Oregon’s warmer and drier climate produces award-winning vintages that experts say rival California’s fabled Napa Valley.

The Oregon Wine Council says wine tasting room sales declined during the pandemic by an estimated 80%, a $3 billion loss, while smaller wineries relying on tasting room and restaurant sales lost more than 60% of their revenue because of COVID-19 closures. The last thing Oregon’s beer and wine industry needs now is a tax increase of this magnitude.

There is no question that the state needs more alcohol treatment. It’s also true that beer and wine taxes have not increased in decades. But the timing of this proposal is terrible.

If better treatment is needed, the Oregon Health Authority should find money in its existing budget to make that a priority before threatening the health of the state’s already struggling beer and wine industry.