DISCUS: Oregon Surcharge Would Cost Restaurants, Package Stores $40 Million

A proposed addition 50-cent surcharge on spirits containers would cost Oregon restaurants and liquor stores $40 million in sales and 450 jobs in the first few years, Adam Smith, state government relations, told the Oregon Liquor & Cannabis Commission.

He noted the proposed surcharge is on top of a "temporary" 50-cent surcharge adopted in 2009 that's still in place. "Now is not the time to impose higher fees on the Oregon hospitality industry, where employment is still down by 11,000 jobs compared to pre-pandemic levels,” said Smith.

Oregon's 113% markup on spirits products, Oregon is 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.

The DISCUS analysis points to multiple studies that show alcohol abusers are not deterred by higher prices. For example, a 2015 study published in the journal Health Economics Review concluded: “Increased alcohol taxes or prices are unlikely to be effective as a means to reduce binge drinking, regardless of gender or age group.”

Public health groups also addressed the agency and supported the proposed increase.  

“We are a very [substance] abusive state,” said OLCC Chair Marvin Révoal. “As we move forward your comments will be well received and accepted. We are not trying to convince one another as to what to do. We’re going to continue this [public] process because it’s very important.”