Grocery Chains Are Writing Checks to Make $1,600 Rebate Disappear

Grocery chains have been forking over money in effort to block a controversial $1,600 rebate in Oregon.

Measure 118 will be on the ballot for Oregon voters this fall. Under the measure, all residents would get a $1,600 rebate funded by a 3 percent sales tax. The tax would apply to all businesses that see state sales of more than $25 million a year.

Grocers who could see the tax hurt their profit margins are fighting to make the rebate disappear, filings with the Oregon secretary of state showed.

According to paperwork, Kroger, Albertsons-Safeway and Costco wrote $500,000 checks to the Grocery Retail PAC, while WinCo Foods sent $250,000.

The Grocery Retail PAC has sent $1 million to a campaign that looks to axe Measure 118 and prevent the sales tax's potential damage to the grocers' bottom lines.

Altogether, the PAC has seen $5.8 million in contributions, with substantial money sent by Weyerhaeuser, Lithia Motors, Standard Insurance, Daimler Trucks, U.S. Bank and Roseburg Forest Products, the Willamette Week reported.

Proponents of Measure 118 said the rebates will support residents who are still facing inflation and could prevent poverty while injecting more money into the economy.

However, a group of Republican and Democratic lawmakers have brought up concerns about how the rebate could impact the state long term, potentially creating job losses and inflation that would end up wrecking the economy instead of stimulating it.

If approved, the state would bring in $7 billion more in tax revenue yearly, but another analysis indicated that Oregon would lose $400 million in its 2025-27 budget cycle because of the rebates.

"As a matter of public policy, we believe this is a bad deal for Oregonians," a group of Democratic lawmakers wrote last week. "We ask Oregonians to take a closer look at Measure 118, and we ask you to join us in voting no."

The group included House Speaker Julie Fahey, House Majority Leader Ben Bowman, Senate President Rob Wagner and Senate Majority Leader Kathleen Taylor.

The officials pointed to "concerning, potentially dire implications," especially with regard to government services' ability to fund road maintenance, health care and public safety.

"In these tough times, we all want working families to get every break they can, but Measure 118 is not the answer," they said. "We have grave concerns it will slow job growth and cause cuts to critical services like road maintenance, firefighting and addiction recovery."

The bipartisan pushback to the rebate arrives after Governor Tina Kotek already made her concerns about Measure 118 known.

"It may look good on paper, but its flawed approach would punch a huge hole in the state budget and put essential services for low-wage and working families at risk," Kotek told Willamette Week.

Taxpayers may be inclined to support the rebate program because, on paper, it is a $1,600 boost to their financial situations, said Alex Beene, a financial literacy instructor for the University of Tennessee at Martin.

"Especially when inflation hurts the cost of living for so many Americans, the appeal of extra money coming to your pocket is alluring, to say the least," Beene told Newsweek. "However, the general fear—and a right one to have—is these potential increased taxes on business sales could lead to those costs being passed on to the consumer. And while some may label this as being simply corporate greed, the reality is not all businesses operate on high profit margins."

Grocery stores tend to make a profit of a few cents on many products, and any tax that takes aim at sales could easily wipe out those profits, Beene said.

"At the end of the day, the question for most living in Oregon is not if they would like a $1,600 rebate, because that's a given," Beene said. "Of course they would. The better question is, 'Would this proposal ultimately lead to higher prices that would wipe out the rebate I'd be receiving?'"