Consumers, Businesses, and State Would Lose with Measure 118

Consumers, Businesses, and State Would Lose with Measure 118

Published on Sep 5, 2024

by Katy Brooks, CEO & President, Bend Chamber

 

Measure 118 is the most misleading measure on this year’s ballot and would be the largest tax increase in Oregon’s history. This so-called “rebate” is actually a massive tax on sales that would ultimately cost Oregon residents far more than it promises to give.

Measure 118 would impose a 3% tax on a corporation’s gross annual sales in Oregon over $25 million. Although it’s tempting for some to think this is a way to redistribute wealth away from businesses but it is actually a tax we all will pay.

The measure is a new tax on sales, not profits — impacting businesses even if they lose money. It would be paid by local businesses, large and small alike. It is also a tax on a tax and will be added on top of the current corporate activity tax that Oregon businesses have been paying since 2019.

Measure 118 will tax at every step of production and sales, from wholesale to retail in Oregon. Here’s how price increases caused by the measure would affect consumers: The price hike starts at 3% on raw materials. Next comes manufacturing, packaging, distribution, and the retail sale of the product.

By the time it reaches the consumer, the product may have five or more price increases resulting from the Measure 118 tax. The math does not look good to those of us who have lived through some of the greatest inflation hikes in decades.

To put it in a way that hits home for all of us, one of the first places consumers will notice the increased tax on sales from Measure 118 is at local stores, including the grocery store, the pharmacy, the car dealership — any place where products are sold to consumers. It is effectively a compounded tax on sales that will show up nearly everywhere, with no exemptions.

Measure 118 also has significant consequences for the state budget. This new tax would tap into the general fund budget, costing the state conservatively over $500 million dollars each year. Schools, health care, and other core services are paid out of this fund. Taxpayers will likely have to make up the funding gap caused by the new tax. This is a clear misalignment with the intent of the measure.

To add to the angst of how taxpayers will pay for this so-called “rebate,” Oregon is facing an uncertain future in job growth. We are seeing personal incomes level off since the competitive market of post-COVID. Companies will now not only be making choices on how much to increase consumer costs but also whether they can afford to keep or grow their workforce or business. The potential for job loss and economic strain caused by Measure 118 is a serious blow to our state.

Another flaw is that Measure 118 provides large loopholes in how revenues raised by the tax can be changed. State legislators will see an estimated $6.8 billion in new revenue and can amend the tax with a simple majority vote, redirecting revenue away from the “rebate” and into other programs. That seems likely given the state revenue gap created by the measure itself.

The intent of Measure 118 was to help spread wealth among all Oregonians. But the result is far from that and will have many unintended consequences. Our hope is that Oregonians look beyond the flashy, misleading ballot language. This isn’t a rebate —it is a poorly conceived measure that adds a high cost to Oregon businesses, consumers, and the state, ultimately costing far more for every dollar received.

That’s why a broad, bipartisan coalition of over 400 businesses and organizations have already come out against Measure 118. It’s bad for all Oregonians. Are you interested in learning more? Please visit https://NOonMeasure118.com/ or attend an informational meeting 5 p.m. to 7 p.m. Sept. 17. Register at bendchamber.org.

Katy Brooks, CEO & President, Bend Chamber

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