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Big Tobacco did something unusual in Marlboro Country last fall: It stood aside as Colorado voters passed the first tobacco tax in 16 years.
The industry, led by Altria Group, one of the world’s largest tobacco companies, has spent exorbitant money in the past to kill similar state voting initiatives. In 2018, Altria’s lobbying division spent more than $ 17 million to help defeat Montana’s tobacco-tax voting initiative. That same year, it spent about $ 6 million to help beat South Dakota’s similar measure.
And four years ago, Altria was the main financier in a successful $ 16 million campaign to reverse the previously proposed increase in Colorado tobacco taxes.
In November, however, Altria didn’t spend a penny on opposition, and Colorado voters overwhelmingly approved the tax with two-thirds of the support. Likewise, Big Tobacco in Oregon remained on the sidelines as a tax increase passed there.
The tax measures are big victories for anti-smoking advocates after a series of defeats, but in an example of how politics makes strange bedfellows, the Colorado tax might not have been possible without Altria’s help. And, advocates said, how those measures passed this year could be a blueprint for states to follow in future elections.
In Colorado, Altria, the parent company of Marlboro cigarette maker Philip Morris, insisted that a reserve price be included in the proposal, according to The Colorado Sun, citing emails between political advisers and Colorado Gov.’s office. Jared Polis. So while advocates see an increased tobacco tax as more revenue for the state, a barrier to smoking for children and a public health win, the measure could also allow US premium tobacco companies to gain market share.
The Colorado measure will increase the total state-levied tax from 84 cents to eventually $ 2.64 per pack by 2027. The tax rate on vaping products, not currently taxed, will be 30% of the manufacturer’s list price by 2021 and gradually increase to 62% by 2027. The proposal also sets the minimum price per pack of cigarettes at $ 7 from January 1 and that floor rises to $ 7.50 by 2024. The change could effectively help premium cigarette makers conquer the market as cheap cigarettes would go up to $ 7.
Discount cigarette makers Liggett Group, Vector Tobacco and Xcaliber International – which funded the opposition to the tax initiative, Proposition EE – tried to sue the state for the minimal tax provision, claiming “Philip Morris will reap enormous benefits from the new legislation” ” Destroy their ability to compete in Colorado. ” In December, a federal judge rejected the company’s request for a preliminary injunction. A spokesman for Liggett said the company plans to appeal.
“When it came to entities like Altria and other stakeholders that we were involved in the legislative process, I think they saw the writing on the wall,” said Jake Williams, executive director of Healthier Colorado and one of the main organizers behind Proposition EE. “And it helped us get through the legislative process, not just with Democratic votes, but with Republican votes to refer the measure to the vote.”
Altria officials said in a statement that their tobacco companies are against tax increases, but they did not acknowledge whether they were working with Colorado lawmakers.
Altria did not advocate or oppose Proposition EE, and after evaluating the content and intent of this measure, Colorado voters decided to vote for it, some aspects of which were aimed at reducing tobacco damage and could aid in the transition from adult smokers to an incombustible future, ”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 matters that are under active lawsuit. State Democratic Senator Dominick Moreno and rep. Julie McCluskie, both state sponsors of the legislation, declined to comment for the same reason. Fellow Democrats Rep. Yadira Caraveo and Senator Rhonda Fields, also state sponsors for the legislation, did not respond to requests for comment.
Campaign finance data in Colorado shows that in 2020 the Altria and Altria lobbying division contributed funds that support both Democratic and Republican candidates in the state – a pattern that is happening nationally.
Williams said Altria’s absence from public opposition was not the only factor in the initiative’s success. The tax revenues will initially fund the income lost during the COVID-19 pandemic, then tobacco prevention, and eventually preschool education.
The American Lung Association, which backed the Colorado measure, said tobacco taxes are one of the most effective ways to reduce tobacco use, especially among young people, who are more sensitive to price changes. The organization cites studies that for each increase in the price of cigarettes by 10%, consumption is reduced by about 4% for adults and 7% for teenagers.
“Without opposition from the tobacco industry, it is very popular with the public,” Thomas Carr, the association’s director of national policy, said of the tax increase. “We’ve seen it in polls on the topic for a long time.”
There was also no major industry opposition to the Oregon boom. The increase in the tobacco tax – measure 108 – also received two thirds of the aid. But Oregon didn’t negotiate or set a reserve price with Altria lobbyists, according to Elisabeth Shepard, campaign leader for Yes for a Healthy Future.
“I don’t know what the [Colorado] deal, ”Shepard said. “All I know is that before it even got to the vote, Altria said they would not be against the measure and would stick with their word.”
While Shepard was concerned until election day whether Big Tobacco would storm the opposition in Oregon, it wasn’t. She believes her campaign worked because the effort had resources and money early on, the tax was intended to fund the Oregon Health Plan (the state’s Medicaid), and her campaign’s coalition had 300 supporters, including those in health. – and business world.
“We had the left, we had the right, we had the far right, we had the far left,” Shepard said.
Her campaign paid members of the advisory committee, including representatives of affected communities such as Oregon native tribes. At least 30% of American Indian and Alaska Native adults in the state smoke cigarettes. Oregon’s measure increases the tobacco tax by $ 2 per pack from $ 1.33 to $ 3.33, and also creates a new tax on e-cigarettes. The revenue will fund an estimated $ 300 million for the state’s health plan.
Altria did not respond to a request for comment about the Oregon tobacco tax, but the company has previously said it was against Oregon’s measure.
Shepard believes her campaign model could work in other states. Other anti-smoking advocates took note of the 2020 election.
“We are certainly in favor of setting minimum prices for all tobacco products in conjunction with tobacco tax increases, as we know that raising the price of tobacco products is one of the most effective ways to reduce tobacco use,” said Cathy Callaway, director of national and local campaigns. for the American Cancer Society Cancer Action Network.
According to Mark Mickelson, a former Republican in the South Dakota legislature, it could just boil down to a state’s voters and its politics. Mickelson was behind his state’s failed initiative for the 2018 tobacco tax vote.
“We just got beat,” said Mickelson. “[The opposition] was ahead of us. They had a lot more money and had just played on the doubt that the [tax revenue] money would go to the technical department. “
The state’s average cigarette tax is $ 1.88 per pack, but it varies from country to country – up to $ 4.35 in New York and just 44 cents in North Dakota, where a 2016 voting initiative to raise that 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 officer at the impartial Urban-Brookings Tax Policy Center.
“It’s a little easier to pass a tax on to someone else, and that’s often how this is perceived – passing this tax on to smokers instead of passing it on to all working people, [compared to] if you were to increase income tax or … a sales tax. “
But not all voters get a vote.
In Kentucky, which is not a state for a referendum, Republican Rep. Said. Jerry Miller says there is not much sympathy left for tobacco manufacturers.
“The farming community, which used to be on par with cigarette manufacturers, is now always in opposition as the cigarette makers are always trying to adapt their formula to use cheaper tobacco,” he said.
Miller’s recent vapor tax bill has failed in the state legislature, but he’s working on a new one.
“We don’t have that tradition or mechanism that someone collects 10,000 signatures and they get a referendum on a vote,” 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 about health issues. It is an editorially independent program from KFF (Kaiser Family Foundation) which is not affiliated with Kaiser Permanente.
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