Oregon Proposing Coffee Tax

Posted on: 2017-02-10 1:40 PM

The Oregon legislature is considering a new bill that would tax coffee beans and ground coffee.
 
The bill, currently in the House, would impose a tax on wholesale coffee.
 
House Bill 2875 would impose a five cent per pound tax on coffee at the wholesale level.
 
Proceeds from the tax would go to something called the "Alternative Education Sustainability Fund," to be spent on capital construction and primary school reading programs.
 
The bill has not yet been set for a hearing and does not yet include any analysis of how much money it might raise. Based on a rough calculation, using a consumption figure of 10 pounds of coffee per capita annually and a state population of just over four million, it looks like it could raise around $2 million a year.
 
That's insignificant in the context of a gap between what lawmakers want to spend and available revenues for the next two years of $1.8 billion. It's common early in a legislative session for lawmakers to propose a wide variety of ideas to see what might get traction, and with this year's budget gap, all sorts of new tax ideas are on the table.
 
Normally, however, when policymakers at the state or local level propose new taxes, they seek to establish a clear connection between the tax and the purpose for which revenue is raised. Property taxes, for instance, pay for schools, public safety, and parks, all of which are services property owners either use or support.
 
The relationship between coffee consumption and alternative education is less clear.
 
It is proposed that half the funds will go toward the Oregon Military Department to be used in the Oregon National Guard Youth Challenge Program.
 
Would 5 cents a pound generate enough revenue to even bother collecting it?
 
Given the efficiency of most bureaucracies, it would most likely cost them $1,999,999.00 to set up a department that would collect and track the tax, leaving the consumers with a whole $1.00 for the destined programs. “Don’t spend it all in one place, fellas.”
 
If passed, the bill would go into effect on July 1, 2018.