Big Tobacco did an unusual thing in Marlboro Country last fall: It stood aside while Colorado voters approved the state’s first tobacco tax hike in 16 years.
The industry, led by the Altria Group, one of the world’s largest tobacco companies, has in the past spent inordinate amounts of money to end similar government election initiatives. In 2018, Altria’s lobby arm spent more than $ 17 million to defeat Montana’s tobacco tax electoral initiative. In the same year, around $ 6 million was spent to defeat the similar South Dakota measure.
And four years ago, Altria was the leading funder in a successful $ 16 million campaign to repeal Colorado’s previously proposed tobacco tax hike.
In November, however, Altria didn’t spend a dime on the opposition, and voters in Colorado overwhelmingly approved the tax with two-thirds of support. Big Tobacco also stayed on the sidelines in Oregon while there was a tax hike there.
The tax measures are a huge win for anti-smoking advocates after a string of defeats, but in an example of politics making strange bedfellows, Colorado’s tax might not have been possible without Altria’s help. And, proponents say, the way these measures have been passed could provide states with a blueprint to follow in future elections.
In Colorado, Altria, the parent company of Marlboro cigarette maker Philip Morris, insisted on including a reserve price in the proposal, according to The Colorado Sun, citing emails between political advisors and Governor Jared Polis’ office. While proponents see a higher tobacco tax as increased revenue for the state, an incentive for children to smoke, and a public health benefit, the move could also enable America’s premium tobacco companies to gain market share.
The Colorado measure will increase the total tax levied by the state from 84 cents to eventually $ 2.64 per pack by 2027. The tax rate on vaping products, which is currently not taxed, will be 30% of the manufacturer’s list price in 2021, gradually increasing to 62%, and the proposal also stipulated that the minimum price per pack of cigarettes would be $ 7 from Jan. 1 and that minimum price increases to $ 7.50 in 2024. The change could effectively help premium cigarette companies enter the market, as discount cigarettes would go up to at least $ 7.
The discount cigarette companies Liggett Group, Vector Tobacco and Xcaliber International, which funded the opposition to the Proposition EE tax initiative, tried to sue the state over the minimum tax requirement, claiming that “Philip Morris will benefit greatly from the new legislation” and the Changes will “destroy their ability to compete in Colorado.” In December, a federal judge denied the company’s application for an injunction. A Liggett spokesman said the company plans to appeal.
“When it came to companies like Altria and other stakeholders that we got involved in the legislative process, I think they saw the writing on the wall,” said Jake Williams, executive director of Healthier Colorado and a key organizer of Proposition EE . “And it helped us get through the legislative process, not just with Democratic votes, but Republican votes as well, to put the measure on the ballot.”
Altria officials said in a statement that their tobacco companies are opposed to excise tax increases, but they didn’t say if they had partnered with Colorado lawmakers.
“Altria has not spoken out for or against Proposition EE, and after evaluating the content and intent of this move, Colorado voters have decided to vote for it. Some aspects of it focused on reducing tobacco damage and could help make adult smokers a non-flammable future, ”the statement said.
Polis’ office did not respond to a request for comment. The Colorado attorney general said it would not comment on matters relating to active litigation. Democratic Senator Dominick Moreno and Rep. Julie McCluskie, both state sponsors of the legislation, declined to speak for the same reason. Democrat colleagues Yadira Caraveo and Sen. Rhonda Fields, also state sponsors of the legislation, did not respond to requests for comment.
The Colorado campaign’s financial records show that in 2020 Altria and Altria’s lobby arm contributed funds to support both Democratic and Republican candidates in the state – a pattern that is having an impact at the national level.
Williams said Altria’s lack of public opposition was not the only factor behind the initiative’s success. The tax revenue will first fund the revenues lost during the COVID-19 pandemic, then tobacco prevention and finally preschool education.
The American Lung Association, which supported the Colorado move, believes tobacco taxes are one of the most effective ways to reduce tobacco use, especially among teenagers who are more sensitive to price changes. The organization cites studies that found that every 10% increase in the price of cigarettes reduces consumption by around 4% in adults and 7% in teenagers.
“With no opposition from the tobacco industry, it’s very popular with the public,” said Thomas Carr, director of national policy for the association, of the tax increase. “We’ve seen it in polls on this for a long time.”
Nor was there any major industry opposition to the surge in Oregon. The increase in the tobacco tax – measure 108 – was also supported two-thirds. However, according to Elisabeth Shepard, campaign manager for Yes for a Healthy Future, Oregon has not negotiated with Altria lobbyists or set a reserve price.
“I do not know what [Colorado] It was a deal, ”Shepard said. “All I know is that before the election even came about, Altria indicated that they would not oppose the measure and that they kept their word.”
While Shepard worried until Election Day whether Big Tobacco would face opposition in Oregon, it wasn’t. She believes her campaign worked because the effort had early resources and money, the tax was aimed at funding the Oregon Health Plan (state Medicaid), and her campaign coalition had 300 supporters, including those in health and business communities .
“We had the left, we had the right, we had the extreme right, we had the extreme left,” Shepard said.
Their campaign paid for the advisory committee members, including representatives of affected communities such as indigenous tribes in Oregon. At least 30% of Alaska’s adult Indians and Native Americans in the state smoke cigarettes. Oregon’s move increases tobacco tax by $ 2 per pack from $ 1.33 to $ 3.33 and creates a new tax on e-cigarettes. The proceeds will help fund an estimated $ 300 million for the state health plan.
Altria didn’t respond to a request for comment on Oregon tobacco taxes, but the company previously said it was against Oregon’s move.
Shepard believes her campaign model could work in other states. Other anti-smoking advocates took note of the 2020 election.
“We definitely support setting minimum prices for all tobacco products in conjunction with tobacco tax increases, as we know that increasing the price of tobacco products is one of the most effective ways to reduce tobacco use,” said Cathy Callaway, director of state and local campaigns for the American Cancer Society’s Cancer Action Network.
According to Mark Mickelson, a former Republican in the South Dakota legislature, it could only be about the voters and the politics of one state. Mickelson had lagged behind founding his state’s failed tobacco tax election initiative for 2018.
“We just got hit,” said Mickelson. The opposition “drew our attention to the message. They had a lot more money and had just played with doubts that that [tax revenue] Money would go to Tech Ed. “
The average state cigarette tax is $ 1.88 per pack, but it varies across the country – up to $ 4.35 in New York, but only 44 cents in North Dakota, where a 2016 election initiative to increase it to $ 2.20 was rejected .
Tax increases can generate hundreds of millions of dollars in new revenue for states, said Richard Auxier, senior policy associate at the impartial Urban-Brookings Tax Policy Center.
“It is a bit easier to pass a tax on to someone else, as is often seen – pass that tax on to smokers rather than pass it on to everyone who works. [compared to] if you were to raise income tax or … a sales tax. “
But not all voters have a say.
In Kentucky, which is not a referendum, Republican MP Jerry Miller said there was no longer much sympathy for tobacco companies.
“Agriculture, which used to be on the same side as the cigarette companies, is now always in opposition because the cigarette companies are always trying to tweak their formula to use cheaper tobacco,” he said.
Miller’s latest vaping tax bill failed in state parliament, but he’s working on a new one.
“We don’t have that tradition or the mechanism for someone to collect 10,000 signatures and get a referendum on a vote,” he said. “That’s why things like that have to go through the legislature – and that really only depends on the state [government]. “
(Kaiser Health News (KHN) is a national health news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation that is not affiliated with Kaiser Permanente.)
(c) 2021 Kaiser Health News
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