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Tax bill a false start to a legitimate goal

At the heart of House Bill 3296 is a legitimate question deserving legislative attention: As alcohol addiction exacts an increasing toll on Oregon’s communities, should the state’s beer and wine industries contribute more for services that counter their products’ harmful — even deadly — downsides?

Unfortunately, any discussion over that reasonable premise gets quickly tanked by the particulars of the bill, which drops a massive tax proposal on the beer and wine industries. The bill, sponsored by Rep. Tawna Sanchez, D-Portland, calls for hiking the state’s excise tax on beer by 2,700%, from $2.60 to $72.60 per barrel. The proposal also seeks to increase wine’s excise tax by 1,500%, from 65 cents to $10.65 per gallon. The proposal comes as many breweries, wineries and hospitality businesses are struggling from the past year’s pandemic losses and closures.

The bill has certainly has grabbed people’s attention. But that may be its lone victory as even one of the bill’s original chief sponsors, Rep. Rachel Prusak, D-West Linn, has pulled her name from the legislation. No other legislators have signed on as sponsors, perhaps recognizing what advocates should also see: the size, timing and consequences of this proposal are spelling its doom.

While this particular bill should not advance, debate over how to solve the underlying question should — with industry commitment to find an answer and deliver a bill for raising funds in the next legislative session.

Advocates, led by Oregon Recovers Executive Director Mike Marshall, rightly point out the state’s puny response to the public health crisis fueled by alcohol addiction. An EcoNorthwest report concluded that excessive alcohol consumption costs Oregon

$2.6 billion a year in criminal justice, health care, education and social service expenditures and another $2.2 billion in lost productivity. From 1998 to 2017, the rate of alcohol-induced deaths has nearly doubled to 21.2 per 100,000 people, according to the Oregon Alcohol and Drug Policy Commission. Alcohol abuse runs through some of Oregon’s most intractable problems, from child abuse and neglect cases to homelessness.

While the voter-approved Measure 110 may improve funding for substance abuse programs, Marshall contends that will largely move around existing money, when more resources are needed. Meanwhile, Oregon has not raised its excise taxes on beer and wine in decades, with the beer tax lower than nearly every other state. The wine industry benefits from other favorable treatment including a law that exempts wineries producing less than 40,000 gallons a year from paying the state excise tax at all.

But advocates must not let their passion interfere with seeking reasonable compromises. The mechanics of distributing beer and wine ensure that the tax hike would increase prices to consumers far higher than the 21 cents per beer/31 cents per glass of wine that advocates claim. The tax would factor into how much breweries charge distributors; how much distributors charge retailers; and how much retailers charge customers. A big increase will drive off not just underage and excessive drinkers, but responsible customers as well.

It’s also unclear why the advocates would seek a proposal that propels Oregon excise taxes to the highest in the nation by several multiples. That they would do so when many are trying to get through the pandemic only turns its controversial proposal into an incendiary one.

Without a doubt, this state needs a serious conversation about the health and safety consequences that substance abuse is having on Oregonians. Craft beer and wine industry representatives told The Oregonian/OregonLive Editorial Board that their members care about their communities and are open to exploring the issue. Advocates and industry alike should show their commitment and start those serious conversations now.