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Oregon’s Government Found Higher Taxes on Wine Didn’t Deter Alcohol Abuse, Then Sat On Findings

As the Oregon state legislature is locked in a contentious debate over raising excise taxes on wine and beer to curb excessive alcohol consumption, an Oregon health agency may have withheld a 2021 study that found higher taxes have little impact on getting abusive drinkers to cut back on consumption.

The Oregon Health Authority (OHA) denies it was intentional, but when local newspaper The Oregonian first broke the news last week, area wine industry leaders were not so sure. The study was not shared with the state legislature or a task force recently established by the legislature to study the issue.

“It does appear that OHA was intentionally withholding important information while simultaneously advocating for a tax increase that would really hurt industries that are already struggling with a myriad of business and climate-related challenges,” Jana McKamey, executive director of the Oregon Winegrowers Association, told Wine Spectator.

Jonathan Modie, a lead communications officer with OHA, said that though his agency released a preliminary report by research firm ECONorthwest in November 2021, it “fell short” by not releasing the final report until Jan. 25, 2024, after news of it became public. “Publishing the final report would have provided the people of Oregon a more complete picture of ECONorthwest’s findings and recommendations. OHA apologizes for this error.”

Report Finds Minimal Impact on Alcohol Abuse

The report studied excessive alcohol consumption in Oregon and examined the economic impact of increasing the alcohol excise tax on wine and beer to 20 cents per standard drink from the current 67¢ per gallon for table wine and $2.60 per 31-gallons of beer. That increase would raise Oregon’s tax from one of the lowest in the nation to one of the highest.

The report found that higher taxes would reduce overall consumption by 5 percent—but only about 2 percent for excessive drinkers, who account for most of government spending on alcohol abuse. When researchers factored in the probability that excessive drinkers would simply switch to cheaper types of alcohol, the reduction dropped below 1 percent. Oregon’s government would, however, raise significantly higher revenues—an estimated $239 to $245 million per year.

Will Wineries And Moderate Drinkers Be Hurt?

“The legislature in the last few sessions has been discussing a beer and wine tax increases very seriously. In the last session, legislators were not prepared to pass a tax increase. It requires a three-fifths majority, and the votes weren’t there, so we agreed to support a creation of a task force that would look at these issues,” said McKamey, who is a member of that task force.

The 20-member group met in early January for the first time, and the next session will be held February 1, when OHA is scheduled to present. The next legislative session starts Feb. 5, but the task force is not scheduled to submit its findings until September. “We will likely see a bill the following session,” McKamey said.

Since Oregon does not have a sales tax, wineries would bear the financial burden of higher taxes or be forced to raise prices in an increasingly competitive and difficult market. As it stands, only 3 percent of alcohol tax revenue goes toward mental health and drug addiction programs. The state, McKamey said, should rethink how it uses existing tax money. “There’s a disconnect between the money and the outcomes.”

But Modie and OHA believe a tax increase will benefit the state. “There are numerous studies that show that increasing the price of alcohol and other strategies are effective at preventing excessive alcohol use and related harms.”

Just not the OHA’s study, apparently.

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