Oregon State House Sneaks In Sales Tax

The blog on taxrates.com announced “Anti-Sales Tax Oregon Embraces Marijuana Tax” referring to Oregon’s new state sales tax in HB2041 on all marijuana leaves, flowers, immature plants, and cannabinoid products initially at 25% and then at 17% with allowances for local jurisdictions to add another 3% sales tax.  It was largely without fanfare passing in the House on June 25th (43 aye-15 nay) and in the Senate June 30th (24 aye-4 nay) before being prepped for Governor Kate Brown’s signature. Was the bill rushed at the end of the session?  Where are the large headline news articles?  


So why should anyone who does not plan to spend much money on weed care what sort of tax is on it?  Presumably, anyone planning to spend a lot is just too happy that it is finally legal to even notice what form of tax is on it.  After all, Measure 91 to legalize marijuana passed by a handy margin, and it included a growers' tax and a privilege tax on retailers.  We’ve had an excise tax on cigarettes for years.  Why fuss?

Well, this is Oregon, and Oregonians have voted down a sales tax nine times in a many decades tradition.  It is largely thought it may be because it was never paired with the permanent removal of the income tax.  To tax us so much when we earn and then again when we spend, well, it just seems unsporting to many people.  You might say un-American.  


Despite that, the legislature kicked out all the detailed language about the growers’ tax that was already in place within Measure 91 and instead wrote a brand new sales tax.  That’s quite a bit work just to change the nature of the tax.  You might ask yourself why…?  Could it be that the allure of a sales tax is that being on marijuana makes it unlikely that it might face a referendum?  Unlike too many of the other bills this session, it does not have an emergency clause making it eligible for referendum.  The gem is that after no one goes to the expense and energy to mount a referendum campaign to give voters the opportunity to strike it down, the sales tax can be expanded to encompass more products.


A sales tax has been a project of Governor Kitzhaber’s for quite some time, and he has described it as a process.  A Portland Business Journal post from 5-9-2014 has video of the (then) governor explaining: “I will tell you that I think, personally think that a retail sales tax makes imminent sense in a state that has so much income coming through it.  Whether that’s what we end up doing I think is really going to be dictated by, you know, the reality of what we think we can actually get passed.  So the answer is yes. We’re shooting for no later than the general election two thousand sixteen.  We could do something through the legislature earlier.  But that’s where we are in the process.”


Do you remember President Reagan giving the same warning about the socialized healthcare being the most accepted form of socialism?  And that once it was here it would expand.  Again, there is a video of the audio recording of Ronald Reagan explaining this.  Likewise, a sales tax could be palatable on marijuana enough to get the foot in the door. 


And it is not just a sales tax.  It is a high sales tax - much higher than the normal sales tax.  The highest state sales tax is in New York at 8.875% with the runners up being Indiana, Mississippi, New Jersey, Rhode Island and Tennessee, all with a 7% state sales tax.  Four other states have no state sales tax Alaska, Delaware, New Hampshire and Montana.  The average of the 50 states plus District of Columbia is 5.794%.  If this tax is expanded to other products, it can be argued that no one objected enough to refer the statewide sales tax to voters when it was initially passed.  So what other products might the left want to discourage?


Portland is a fish bowl of successful progressive policies due to the lopsided make-up of democrats and republicans.  So, let’s look to Portland where the “best practices” are developed and later rolled out beyond for future 17-20% statewide sales tax possibilities.  If plastic bags were not already banned, they might make the list.  If paper bags were more expensive, they might make the list.  Sugared sodas might make this list.  But for a ideal tax expansion, it needs to provide lots of money to our government from those willing to buy the product, and the product should be something the progressive liberal democrats want to discourage from their utopia.  It just might be gasoline powered cars, trucks, and SUVs.


Look at the head of the Portland Bureau of Transportation declaring publicly a "war on cars" without losing her job.  Look at all the four lanes arterials in Portland being changed to three or two lanes to encourage walking and biking or to implement mass transit.  They include many of the arterials between East County (and I-205) and downtown Portland such as Foster, Powell, Division, Burnside, Glisan and Halsey.  Look at the incentives for buying electric cars and the incentives for installing electric car charging devices. Look at the Low Carbon Fuel Standard just passed that is supposed to add more than a dollar a gallon to gas and heating oil. Oh yes, a 20% gasoline powered vehicle tax is a decent guess for the future.

It just might be cheaper to do that referendum.

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