TOO Wine economy 17 (copy)

A barrel and vines at White Rose Estate. The wine, beer and cider industries are bracing for a potential tax hike in Oregon. 

SALEM — Oregon legislators on Feb. 23 introduced House Bill 3296, dubbed the Addiction Crisis Recovery Act, which would increase the state's beer tax by 2,800% and wine tax by 1,700%.

Based on industry estimates, HB 3296 would increase the cost of every bottle of wine sold in Oregon by more than $2. The tax would be even higher on ciders and beers.

The bill's supporters say it will reduce underage and binge drinking by raising the wholesale price of alcohol, and the money raised from taxes will be invested in treatment and recovery programs and infrastructure for people with alcohol addiction.

Opponents, including beer, wine and cider business leaders, say the proposed tax could devastate their industries at a time when they're already struggling during the pandemic.

“It is unfathomable to think that now is an appropriate time to increase any tax on one of Oregon’s homegrown industries that has suffered the most during the COVID-19 pandemic, let alone one of this magnitude,” Scott Kelley, owner and winemaker at Paul O’Brien Winery in Roseburg, said in a statement Wednesday.

Jennifer Sitton, spokeswoman for the Oregon Wine Council, a statewide industry advocacy association, told the Capital Press the council is "strongly opposing this extreme proposal."

According to the council, wine tasting room sales have already declined during the pandemic by an estimated 80%, a $3 billion loss, while smaller wineries relying on tasting room and restaurant sales lost more than 60% of their revenue due to COVID-19 closures.

Sam Tannahill, founder and winegrower at A to Z Wineworks and Rex Hill winery in Newberg, said in an emailed message Wednesday that the idea of increasing the tax on small, local wineries during an economic crisis is "incomprehensible."

"As written, this proposal would potentially force most of Oregon's prized wineries to simply shut down, as they would be unable to sustain their operations with this drastic of a tax increase," wrote Tannahill.

The bill's advocates, including Oregon Recovers, the nonprofit coalition backing the bill, say the proposal is an important step toward addiction recovery.

The text of the bill says the funding will be used to establish an Addiction Recovery District for each geographic region and tribe in the state and will fund treatment beds, detoxification centers and intensive outpatient openings.

But the bill's critics point out that most consumers don't want a tax hike. According to a survey last month taken by Patinkin Research Strategies, a research firm, 3 out of 4 Oregonians say Oregon's existing alcohol taxes are either too high already or about right.

The Oregon Beverage Alliance, comprised of brewers, winemakers, cidermakers, distillers and suppliers, said in a statement the potential tax hike could be harmful to their industries.

"Oregon already has some of the highest alcohol prices in the country," the Oregon Beverage Alliance reported. Tax increases, the organization said, will "only make it harder for these businesses to invest in rehiring, equipment, upgrades and expansion, and will result in higher prices for consumers."

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