DISCUS Assails Oregon's Proposed Boost in Spirits Surcharge

Distilled Spirits Council of the U.S.  urged the Oregon Liquor & Cannabis Commission to reject a proposal to add a 50-cents-a-bottle surcharge on spirits containers.  That would be in addition to the current, "temporary," 50-cents-a-bottle surcharge recently extended by the OLCC.  

The additional 50 cent surcharge would result in Oregon restaurants and package stores seeing a decline in sales of more than $40 million, resulting in more than 450 lost jobs in the first few years. The analysis also rebutted claims that this surcharge would generate more than $45 million for the biennium pointing out that this figure does not account for lost sales due to fee increases.

“With Oregon hospitality employment still down by 11,000 jobs compared to pre-pandemic levels, it’s baffling that commissioners would increase taxes on responsible spirits consumers and businesses while they continue to recover,” said Adam Smith, DISCUS vp-State Government Relations. “Increased taxes will be passed on to consumers in the form of higher prices leading to lost sales and jobs. For a typical bottle of distilled spirits purchased in Oregon, nearly 70% of the retail cost already goes to pay a tax or fee of some kind. An increase in that number, on top of supply chain disruptions, inflation and staffing shortages, would be too much for many hospitality businesses to bear.”

With a 113% markup on spirits products, Oregon has the highest markup among control states. The implied tax rate in Oregon is estimated to be $22.86 per gallon, significantly higher than the control state average of $13.69. On top of the 113% markup, Oregon also charges a $1.40 case fee and a $0.50 per bottle fee.