Oregon Lawmakers Propose a Tax on Coffee

The Oregon House Committee on Revenue today introduced a bill to tax 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.

Taxing caffeinated beverages is a dicey proposition, as the British learned in 1773.

Any new tax requires a three-fifths majority of both chambers of the Legislature.

Updated on Feb. 10 at 9:30 am: Scott Moore, a spokesman for the House Democrats, says that according House Revenue Committee Chairman Phil Barhnart (D-Eugene), the coffee tax bill is unlikely to move forward.