Hike could have cost Oregon businesses nearly $40 million without curbing alcohol abuse
The Distilled Spirits Council of the United States (DISCUS) today applauded Oregon Governor Tina Kotek for withdrawing her proposal to add an additional $0.50 per bottle surcharge on spirits containers. This surcharge would have been in addition to the current, “temporary” $0.50 per bottle surcharge that has been extended by the Oregon Liquor and Cannabis Commission (OLCC) every year since its inception in 2009.
“We are grateful to Governor Kotek and the OLCC for recognizing how detrimental increased taxes would be on Oregon’s craft distilleries and local hospitality businesses,” said Adam Smith, vice president of state government relations at DISCUS. “Oregon’s hospitality industry has not fully recovered from the pandemic and continues to face new economic challenges like staffing shortages, inflation and supply chain disruptions. Saddling them with higher taxes makes no sense when Oregon already has the highest markup on spirits out of all the control states.”
According to a tax impact analysis by the DISCUS economics department, Oregon restaurants and package stores would see a decline in sales of more than $40 million, resulting in more than 450 lost jobs in the first few years. The analysis also points to multiple studies that show alcohol abusers are not deterred by higher prices.
“The distilled spirits industry is fully supportive of evidence-based measures to help prevent alcohol abuse, but raising taxes is not one of those solutions,” said Smith. “Research shows those who abuse alcohol are not deterred by higher prices. The price increase would have harmed responsible spirits consumers, businesses and Oregon’s workforce without addressing alcohol abuse.”
With a 113% markup on spirits products, Oregon has the highest markup among control states. The implied tax rate in Oregon is estimated to be $22.86 per gallon, significantly higher than the control state average of $13.69. On top of the 113% markup, Oregon also charges a $1.40 case fee and a $0.50 per bottle fee.