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Big Tobacco pulls out as Colorado, Oregon hike cigarette taxes

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Big Tobacco did something unusual in Marlboro Country last fall: It stood on the sidelines as Colorado voters approved the state’s first tobacco tax hike in 16 years.

The industry, led by Altria Group, one of the world’s largest tobacco companies, has spent exorbitant amounts in the past to kill similar state voting initiatives. In 2018, the lobbying branch of Altria spent over $ 17 million to help defeat Montana’s tobacco tax voting initiative. That same year he spent about $ 6 million to help defeat the similar measure of South Dakota.

And four years ago, Altria was the main funder of a successful $ 16 million campaign to reverse Colorado’s previous proposed tobacco tax hike.

In November, on the other hand, Altria did not spend a dime on the opposition and Colorado voters overwhelmingly approved the tax with two-thirds support. Likewise, in Oregon, Big Tobacco has stayed on the sidelines while a tax hike took place there.

The tax measures are major wins for tobacco control advocates after a losing streak, but, in an example of how politics makes strange bedfellows, the Colorado tax might not have not been possible without the help of Altria. And, advocates said, how these measures adopted this year could provide a model for states to follow in the next election.

In Colorado, Altria, the parent company of Marlboro cigarette maker Philip morris, insisted that a minimum price be included in the proposal, according to The Colorado Sun, citing emails between political consultants and the office of Colorado Governor Jared Polis. So while supporters see an increase in the tobacco tax as an increase in revenue for the state, a deterrent for children from smoking, and a victory for public health, the measure could also allow U.S. tobacco companies high-end to gain market share.

Colorado’s measure will increase the total state-levied tax from 84 cents to ultimately $ 2.64 per pack by 2027. The tax rate on vaping products, not currently taxed, will be 30% of the list price. manufacturer’s price in 2021, gradually rising to 62% by 2027. The proposal also set the minimum price per pack of cigarettes at $ 7 as of January 1, and this floor rises to $ 7.50 in 2024. The change could actually help high-end cigarette manufacturers to corner the market, as discount cigarettes would rise to at least $ 7.

Discount cigarette makers Liggett Group, Vector Tobacco and Xcaliber International – which funded opposition to the tax initiative, Proposition EE – have tried to sue the state over the minimum tax provision alleging “Philip Morris will reap huge benefits from the new legislation” and the changes “will destroy their ability to compete in Colorado.” In December, a federal judge rejected the company’s claim for a preliminary injunction. A spokesperson for Liggett said the company was considering appealing.

“With respect to entities like Altria and other stakeholders that we have engaged in the legislative process, I think they saw the writing on the wall,” said Jake Williams, executive director of Colorado healthier and one of the main organizers of the EE Proposal. “And it got us through the legislative process, not just with Democratic votes, but Republican votes to return the measure to the ballot.”

Altria officials said in a statement that their tobacco companies oppose excise tax increases, but they did not acknowledge whether they were working with Colorado lawmakers.

“Altria did not advocate for or against the EE Proposal, and after evaluating the content and intent of this measure, voters in Colorado decided to vote for it, some aspects of which focused on harm reduction. of tobacco and could help adult smokers to become future incombustible, ”the statement said.

Polis’s office did not respond to a request for comment. The Colorado attorney general’s office said it would not comment on the issues that are the subject of active litigation. Democratic State Senator Dominick Moreno and Representative Julie McCluskie, both proponents of the legislation, declined to comment for the same reason. Fellow Democrats Representative Yadira Caraveo and Senator Rhonda Fields, also state sponsors of the legislation, did not respond to requests for comment.

Colorado campaign fundraising records show Altria and Altria’s lobbying arm in 2020 contributed funds that support both Democratic and Republican candidates in the state – a pattern that is playing out nationally.

Williams said Altria’s lack of public opposition was not the only factor in the initiative’s success. Tax revenues will initially fund revenue lost during the COVID-19 pandemic, then fund tobacco prevention and finally fund preschool education.

The American Lung Association, which backed Colorado’s measure, said it believes tobacco taxes are among the most effective ways to reduce tobacco use, especially among young people, who are more susceptible. to price changes. The organization cites studies that found for every 10% increase in the price of cigarettes, it reduces consumption by about 4% for adults and 7% for adolescents.

“Without opposition from the tobacco industry, he is very popular among the public,” Thomas Carr, the association’s national policy director, said of the tax increase. “We have seen it for a long time in the polls on the subject.”

There was also no major industry opposition to Oregon’s increase. Its tobacco tax increases –Measure 108… Also garnered resounding two-thirds support. But Oregon has not negotiated with Altria lobbyists or set a minimum price, according to Elisabeth Shepard, campaign manager for Yes for a Healthy Future.

“I do not know what [Colorado] the deal was, ”Shepard said. “All I know is that before even going to the poll, Altria indicated she was not going to oppose the measure and stuck to her word.

While Shepard worried until election day whether Big Tobacco would join the opposition in Oregon, it did not. She believes her campaign worked because the effort had resources and money in the beginning, the tax was intended to fund Oregon’s health plan (state Medicaid), and the coalition of his campaign had 300 supporters, including those from the health and business communities.

“We had the left, we had the right, we had the extreme right, we had the extreme left,” Shepard said.

His campaign paid off members of his advisory committee, including representatives of affected communities such as the native tribes of Oregon. At least 30% of Native Americans and Alaska Natives in the state smoke cigarettes. Oregon measurement increases tobacco tax of $ 2 per pack from $ 1.33 to $ 3.33, and creates a new tax for electronic cigarettes. The revenues will help fund about $ 300 million for the state’s health plan.

Altria did not respond to a request for comment on Oregon’s tobacco taxes, but the company has said previously he opposed Oregon’s measure.

Shepard believes his campaign model could work in other states. Other anti-tobacco activists have taken note of the 2020 election.

“We certainly support setting minimum prices for all tobacco products alongside increasing tobacco taxes because we know that raising the price of tobacco products is one of the most effective ways to reduce smoking, ”said Cathy Callaway, director of national and local campaigns. for the American Cancer Society Cancer Action Network.

It might just come down to a state’s voters and its policies, according to Mark Mickelson, a former Republican in the South Dakota legislature. Mickelson was behind the creation of the 2018 tobacco tax voting initiative, which failed.

“We just got beaten up,” Mickelson said. “[The opposition] anticipated our message. They had a lot more money and just gambled on the doubts that [tax revenue] the money would go to technology.

The average state cigarette tax is $ 1.88 per pack, but it is varied nationwide – up to $ 4.35 in New York and just 44 cents in North Dakota, where a 2016 vote initiative to raise that amount to $ 2.20 was defeated.

Tax increases can translate into hundreds of millions of dollars in new revenue for states, said Richard Auxier, senior policy associate at the non-partisan center for tax policy Urban-Brookings.

“It’s a little easier to pass a tax on to someone else, which is often the case – by passing that tax on to smokers, rather than passing it on to all workers,” [compared to] if you increase income tax or… a sales tax. “

But not all voters have a say.

In Kentucky, which is not a referendum state, Republican Representative Jerry Miller said there was not much sympathy for the tobacco companies left.

“The farming community, which was once on the same wavelength with the cigarette makers, is now still in opposition because the cigarette manufacturers are always trying to change their formula to use cheaper tobacco,” he said. he declares.

Miller’s recent vaping tax bill failed the state legislature, but he’s working on a new.

“We don’t have that tradition or the mechanism whereby someone collects 10,000 signatures and gets a referendum on a ballot,” he said. “That’s why things like this have to go through the legislature – and so it really just depends on the state.” [government]. “

KHN (Kaiser Health News) is a non-profit news service covering health issues. This is an independent editorial program of KFF (Kaiser Family Foundation) which is not affiliated with Kaiser Permanente.

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