Oregon bev-alc consumers may have to open their wallets and pay sales tax for the first time, should proposed amendments to House Bill 3197 pass.
Amendments proposed by Rep. Tawna Sanchez were made public Tuesday, and would add an up to 8% retail sales tax on purchases of “malt beverages, cider and wine” in the state. Brewbound previously reported on a draft of proposed amendments, which was introduced March 3. The official amendments were not made public until yesterday (March 26).
As previously reported, the amendments propose a sales tax rate of 2% of the retail sales price for purchases made on or after July 1, 2026, which would increase to 4% on January 1, 2028; 6% on January 1, 2030; and 8% on January 1, 2032.
Breweries that produce fewer than 150,000 barrels of malt beverages annually “at the brewery or elsewhere, through any entity owned or affiliated with the brewery,” or produces 15,000 barrels on-site annually, would be exempt from the tax.
If passed, the change would mark Oregon’s first grocery and restaurants sales tax, as the state does not have a general sales tax. A public hearing for the bill will be held by the Joint Committee on Addiction and Community Safety April 2 at 5 p.m. PST.
According to H.B. 3197, the money from the sales tax would be primarily used to help curb underage alcohol and drug use.
After “administrative and enforcement expenses and refunds or credits arising from erroneous overpayments,” 85% of the collected sales tax will be transferred to the Youth Development Division Fund, a government agency established in 2013, which provides support for Oregonians up to 24 years old, including resources for education, crime prevention and the reduction of “high risk behaviors.”
The new funding would be designated specifically for “alcohol and drug abuse prevention programs developed for youths under the age of 21,” according to the amended text.
The remaining 15% of collected sales tax would be given to state counties.
Oregon Recovers, a nonprofit organization focused on alcohol and drug abuse prevention and recovery, has shared its support for the bill, alleging that “addiction costs Oregon $6.7 billion a year.”
Oregon Recovers executive director Bo Brinson told the Portland Business Journal “Oregon is in a crisis at the moment” and that “every dollar” is needed to “address this crisis.”
However, Oregon has been criticized for allegedly misusing the funding it already receives for such programming, including misplacing funds. During a presentation last year in front of Oregon’s Task Force on Alcohol Pricing and Addiction Services – a task force headed by Rep. Sanchez and created in 2023 to study alcohol addiction and prevention, state programming, and the “benefits and drawbacks of imposing taxes on beer and wine” – The Oregon Health Authority (OHA) admitted that 7.4% of its state-funded budget between 2021 and 2023, equivalent to $72 million, was unaccounted for.
Sanchez also acknowledged during task force meetings that “the state does weird things with its money.”
The Oregon Beverage Alliance (OBA), a group of local brewers, winemakers, cidermakers, distillers and their supply and hospitality partners, has opposed any form of bev-alc tax implementations or increases, including the latest proposed amendments.
“Alcohol taxes are already the third largest source of revenue for the state, yet only 3% goes to funding drug addiction and mental health,” the OBA wrote in a press release shared Tuesday. “The Legislature sends the rest to the general fund. Before increasing taxes on constituents, lawmakers should utilize existing revenue if youth drug addiction and recovery services are truly needed.”
The task force submitted its final report to Gov. Tina Kotek in December, with several recommendations for state action, including, but not limited to, the “re-allocation of current resources for treatment and prevention” and the “need for additional studies, better data collection and monitoring on alcohol addiction, prevention, treatment and recovery.” However, the task force could not “collectively endorse” any specific recommendations, noting that tax increases were not off the table, but there were recognized “drawbacks” to their implementation.
Oregon residents have historically been opposed to adding sales taxes, and have voted against proposed implementation nearly a dozen times, including 79% of voters opposing attempts in 2024, The Oregon Capital Chronicle reported.
“With the highest cost increases in generations and no end in sight, a new 8% sales tax would only harm Oregonians trying to make their hard-earned dollars stretch,” the OBA said in the release. “Lawmakers should not be raising prices through a regressive sales tax on constituents when they’re already at record highs.”
The latest efforts also come as Oregon breweries and wineries report “record closures,” according to the OBA. In the last two years, 70 breweries, taprooms and brewpubs have closed in the state, along with 60 wineries and tasting rooms, the organization reported.
“Oregon is home to more than 300 breweries, 900 wineries, 1,300 vineyards, 70 cideries, 100 distilleries, 73 distributors and 10,000 restaurants, creating hundreds of thousands of good-paying jobs and more than $17 billion in economic activity for the state,” the OBA continued. “These numbers are down because of record closures and Oregonians who rely on these job creators don’t need higher taxes.”
Approximately 318 craft breweries operated in Oregon in 2023 – the latest year production data is available from the Brewersion Association (BA) – making the state the 8th largest by breweries per capita, according to the trade group. Oregon was also ranked No. 3 in economic impact per capita and No. 7 in craft beer production volume.