Analysis: Hike Could Cost Oregon Businesses Nearly $40 Million in Sales & Eliminate Jobs
The Distilled Spirits Council of the United States (DISCUS) testified today before the Oregon Liquor and Cannabis Commission (OLCC) in opposition to an additional $0.50 per bottle surcharge on spirits containers. This surcharge would be in addition to the current, “temporary” $0.50 per bottle surcharge that has been extended by the OLCC every year since its inception in 2009.
In his testimony, Adam Smith, vice president of state government relations at DISCUS, outlined the negative impacts a $0.50 surcharge would have on consumers and businesses.
“Now is not the time to impose higher fees on the Oregon hospitality industry, where employment is still down by 11,000 jobs compared to pre-pandemic levels,” said Smith. “Raising taxes on beverage alcohol does not deter abusers for whom taxes are of little concern, but penalizes responsible beverage alcohol consumers and hospitality businesses, while eliminating tax revenues and jobs. Consumers of distilled spirits should not have to bear such a heavy tax burden.”
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.
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.
The DISCUS analysis points to multiple studies that show alcohol abusers are not deterred by higher prices. For example, a 2015 study published in the journal Health Economics Review concluded: “Increased alcohol taxes or prices are unlikely to be effective as a means to reduce binge drinking, regardless of gender or age group.”
“The distilled spirits industry is fully supportive of evidence-based solutions that help prevent alcohol abuse, but raising taxes is not one of those solutions,” said Smith. “The price increase would harm responsible spirits consumers, businesses, and Oregon’s workforce, without addressing alcohol abuse.”
Smith also noted the significant impact the spirits industry makes on the Oregon economy.
“The spirits industry in Oregon supports more than 19,000 jobs and $2 billion in economic impact,” said Smith. “It also directly impacts the more than 75 Oregon distillers that support tourism, local agriculture and state revenues.”