The Oregon Legislature is considering an immediate 20% increase in the markup on distilled spirits and would adjust the markup each year to account for inflation.
“It’s unfathomable that legislators would increase taxes on responsible spirits consumers and hospitality businesses in the middle of a pandemic that has devastated restaurants, bars and craft distilleries throughout the state,” said Adam Smith, Vice President of State Government Relations, Distilled Spirits Council of the United States. “Increased taxes will be passed on to consumers in the form of higher prices. Higher prices lead to a loss in sales, and a loss in sales leads businesses to cut employment. This, on top of the negative financial impacts created by COVID-19 and the more than 80,000 hospitality jobs lost in Oregon alone, would be too much for many businesses to bear.”
According to a tax impact analysis by DISCUS chief economist, Oregon restaurants and package stores would see a decline in sales of more than $380 million, resulting in more than 5,300 lost jobs in the first few years. Because of the tax escalator provisions in HB 3296, within six years, the markup would grow to almost 145% percent and cost an additional 900 jobs resulting in more than 6,000 people losing their jobs.
Proponents of HB 3296 point to a Maryland tax increase and subsequent decline in binge drinking as proof of success when, in actuality, the reduction in underage drinking and adult binge drinking was part of a national trend, he said
“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,” Smith said. “The price increase would harm responsible spirits consumers, businesses and Oregon’s workforce, without addressing alcohol abuse in the state.”