Oregon: Oregon lawmakers consider liquor tax ahead of Nov. ballot
Source: The Associated Press
By KRISTENA HANSEN
January 24, 2016
Oregonians have many options for places to buy wine and beer. Hard alcohol, however, requires a separate trip to one of the limited state-owned liquor stores. But that could change if voters pass a ballot measure proposed for November that would allow hard alcohol to sit alongside beer and wine on grocery-store shelves.
It’s certainly not the first attempt to privatize Oregon’s liquor industry, nor have stakeholders on either side of the issue necessarily changed their opinions, but the approach this time around is different.
WHAT STARTED THE DEBATE AND WHO’S BEHIND IT?
Oregon’s monopoly over the liquor industry dates back to Prohibition days, and it was a model most other states had also adopted at that time. Many states have since decided the business of buying and selling liquor is better off left to the free market, leaving Oregon in the minority pool of about 18 states that still control of distribution and sales.
Privatization has been a recurring discussion for years in Oregon, but the most aggressive efforts began after voters ended Washington state’s longtime monopoly in 2011. It’s a contentious issue that has pitted grocers concerned with improving their bottom lines – against smaller distilleries, who worry about competing for shelf space at large grocery chains.
The state’s primary concern is losing a big source of tax revenue. In the 2013-15 biennium, the state and local governments received $435 million from all alcohol tax revenue – including liquor, beer and wine.
WHAT’S DIFFERENT ABOUT THE CURRENT PROPOSAL FROM PAST EFFORTS?
The proposed measure, Initiative 71, would privatize Oregon’s liquor market beginning July 2017. It’s backed by a group of Northwest grocers called Oregonians for Competition, who proposed a similar but more complicated measure in 2014. Their previous proposal would’ve privatized the market and, aiming to appease the state, also established a new sales tax on only the liquor industry, not consumers. Still, the word “tax” has historically been a tough sell to Oregonians, who treasure the state’s zero sales tax, so the initiative was dropped after the grocers ran out of time to tweak the ballot language.
So grocers’ solution this year? Let the Legislature figure out the tax issue.
WHAT ARE LAWMAKERS DOING ABOUT IT AND WHAT DOES IT MEAN FOR CONSUMERS?
State lawmakers are have already drafted a proposal, LC 196, for the upcoming short session beginning Feb. 1. During a House Committee on Revenue hearing last week, lawmakers described it as a “contingency” bill should the grocers’ initiative pass in November. It would tax the liquor that wholesalers – not consumers – purchase, and at a rate that aimed at sustaining the state’s revenue stream. However, the bill needs strong support to get the required two-thirds majority vote, so the final version could look drastically different from the current proposal.
Until then, the debate will likely center around Oregonians and the kind of markups they might see when liquor products eventually make it to grocery store shelves.