Study says higher liquor taxes would barely stem heavy drinking

Published 8:04 am Thursday, January 25, 2024

This month, members of a legislatively-mandated task force on alcohol prices and addiction began meeting to study the cost of alcoholism in Oregon and ways the state can beef up prevention and treatment services.

One mandate of the task force is to examine the benefits and drawbacks of increasing taxes on wine and beer.

Oregon’s Health Authority already knows the answer — but it has not publicized the findings of a $60,000 study it commissioned.

The agency never publicly released the 2021 ECONorthwest study, which had clear findings about how helpful raising alcohol taxes would be to curbing heavy drinking and its terrible impacts: Not very.

The study found that increasing Oregon’s excise tax on beer and wine could raise hundreds of millions for the state and reduce public alcohol consumption overall — but that taxes would barely reduce consumption by Oregon’s heaviest drinkers, who disproportionately drive the high societal costs of alcoholism.

“The research tends to show, time after time, that changes in price — and that’s what a tax increase does — it does not appear to affect risky drinking behaviors,” like binge drinking or drinking while pregnant, report author Andrew Dyke said in a 2021 video presentation about the research.

Despite the relevance of the study to a recurring legislative argument over whether Oregon should raise the state’s low beer and wine taxes, this report was never presented to lawmakers and did not get vetted for public release, said Tom Jeanne, deputy state health officer for the Oregon Health Authority.

“This isn’t anything that we’re trying to hide,” Jeanne said in an interview. The report wasn’t commissioned for public consumption, Jeanne said, but to inform the Health Authority’s “Rethink the Drink” campaign, which calls Oregonians’ attention to heavy alcohol use. That campaign launched in the summer of 2022.

Findings from an interim version of the ECONorthwest report, which was finished by January 2021, are published on the Oregon Health Authority website and cited in the agency’s messaging. That first interim report looked at the economic burden of excessive alcohol use in Oregon and found that excessive drinking cost Oregon about $4.8 billion dollars in 2019. If the lost labor costs, criminal justice costs, health care and social welfare costs were averaged out, the harms would total about $1,100 per Oregonian per year, researchers found.

The second and final iteration of that report, completed around November of 2021, summarized those already discovered alcohol harms, but also went into detail about how raising Oregon’s excise taxes on beer and wine might impact drinking in Oregon. That report didn’t get the same publicity.

The final report examined what would likely happen if Oregon increased its excise tax on wine and beer to 20 cents per standard drink, essentially raising Oregon’s tax from one of the lowest in the nation to one of the highest.

Researchers said this change would reduce overall alcohol consumption by about 5% among the drinking population. It could also raise upward of $240 million in new taxes for the state. But the impacts on problem drinking would be less pronounced. Oregon’s heaviest drinkers would likely lower their consumption about 2%, the authors said. Some heavy beer and wine drinkers would switch to lower-priced alcohol, they said.

If Oregon were to raise beer and wine taxes to 20 cents per standard serving, the projected small reduction in heavy drinking would lower the economic burden of alcohol consumption by up to $53 million, or up to 2% of the estimated $2.6 billion yearly public cost.

Jeanne said the health authority likely would have published the final report on alcohol taxes in a normal year. But late in 2021, when the report was finished, the agency was working to launch its broader Rethink the Drink campaign and was short staffed during COVID-19 response, he said.

Jeanne also acknowledged that alcohol taxes are a politically charged issue and one that the agency is careful about discussing.

Now that the Legislature has convened a task force to evaluate whether to raise beer and wine taxes, OHA will present the report’s top research findings to that group, Jeanne said.

Rep. Rob Nosse, a Portland Democrat who co-sponsored the creation of the taxation task force, said he does not remember the study being shared with him before The Oregonian gave him a copy in early January. But that didn’t raise any alarm bells for Nosse, who said a task force bill wouldn’t necessarily draw deep involvement from the health authority.

Aaron Sarnoff-Wood, a task force member and co-founder of 2 Towns Ciderhouse, watches alcohol research closely and read the interim ECONorthwest report published by the Oregon Health Authority. He had not seen the final version of the report before a reporter provided him with a copy but was aware of its existence because he watched a YouTube video of the research presentation its authors gave at a conference in 2021.

Sarnoff-Wood said the report is “explicit in laying out the minimal health benefits to increasing excise taxes.”

“I can see why certain parties didn’t want this document to be available to the public as it would raise obvious questions as to the motives behind tax increases as well as questioning the actual benefits versus the likely devastating costs to the alcohol and hospitality industries,” Sarnoff-Wood wrote in an email. “… I would very much like to hear why it was thought appropriate to withhold this publicly funded research from the public.”

While it’s up to policymakers to decide whether to raise taxes, Jeanne said, even a small percent change in drinking among the heaviest consumers could mean a sizable reduction in volume of drinks they’re consuming.

“A 2% reduction in drinking might not sound like much, but across the whole population that has potentially huge impacts,” Jeanne said, including fewer health problems for heavy drinkers and fewer car crashes.

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