PORTLAND, Ore. — A proposed bill in the Oregon legislature has ignited debate over taxation and economic impact, as lawmakers consider an 8% sales tax on beer, wine, and cider. If passed, the tax would mark an unprecedented shift in Oregon’s tax policy, as the state currently does not impose a general sales tax.
Supporters of House Bill 3197 argue that the tax is a necessary measure to address underage drinking. However, the Oregon Beverage Alliance (OBA) strongly opposes the proposal, citing research from the Oregon Health Authority that suggests alcohol taxes have historically been ineffective in curbing excessive or teen drinking.
In addition to questioning the tax’s effectiveness, the OBA argues that the measure would place an undue burden on an industry already struggling with rising production costs and shifting consumer preferences. The alliance warns that the tax could exacerbate economic pressures on breweries, wineries, and cideries, many of which have faced closures in recent years. According to the OBA, 70 breweries, taprooms, and brewpubs, along with 60 wineries and tasting rooms, have shut down in the past two years.
“The highest cost increases in generations are already stretching Oregonians’ budgets,” the OBA stated. “Adding an 8% sales tax would further burden legal-age drinkers and harm an industry that contributes significantly to the state’s economy.”
Industry and Public Opposition
The proposal faces broad opposition, with the OBA pointing to a legislative task force convened last year to study alcohol taxation. The task force ultimately declined to recommend a tax increase, and 87.5% of public comments submitted on the issue opposed any new tax measures.
Critics also highlight concerns over the allocation of existing alcohol tax revenues. Currently, alcohol taxes rank as the state’s third-largest source of revenue, yet only 3% of those funds are directed toward drug addiction and mental health programs. The OBA contends that before imposing new taxes, lawmakers should first ensure proper accountability for current expenditures, noting that the Oregon Health Authority reportedly could not account for $72 million in substance use disorder spending in the last budget cycle.
Economic Impact on Oregon’s Beverage Industry
Oregon’s alcohol industry plays a significant role in the state’s economy, supporting more than 300 breweries, 900 wineries, 1,300 vineyards, 70 cideries, 100 distilleries, 73 distributors, and 10,000 restaurants. The industry generates over $17 billion in economic activity and provides thousands of jobs. The OBA warns that an 8% sales tax could lead to further closures and job losses.
“We have shown a willingness to collaborate on solutions for Oregon’s drug addiction crisis,” the OBA stated. “However, this bill disregards economic studies and the findings of the task force, which indicate that alcohol taxes do not effectively reduce youth drinking. Instead, lawmakers should focus on improving oversight and reallocating existing funds toward programs with measurable success.”
With HB 3197 now under legislative review, the debate continues over the potential consequences for consumers, businesses, and the broader economy. As discussions unfold, Oregon lawmakers will have to weigh public opposition against their goals for public health and state revenue.
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