Oregon: Historic tax hike to fight smoking

In a referendum, Oregonians approved a proposal to raise taxes on tobacco and nicotine products. The measure comes after nearly two decades of inaction on the issue, which left Oregon among the lowest-ranked states in the country.[1].

With over 66% voters responding positively to the proposed tax measure, Oregon will see its tax levels on tobacco increase significantly, from $1.33 to $3.33 per pack of twenty cigarettes. Called " measure 108 ", this new decision does not spare other products either, since it also allows a tax of 65% on electronic cigarettes. It also provides for an increase in the tax pressure on cigars, which can be taxed up to 1 dollar per unit.

New and pre-allocated tax resources

Advocates say the new taxes signal a growing awareness among Oregonians that health issues take priority over smoking. Measure 108 is estimated to generate about $160 million a year for the state of Oregon. The new money will also go to $90% at the Oregon Health Authority to fund treatment for people with mental health issues. The remaining $10% will go to health care providers and specific programs to combat smoking.

The industry's arguments

In order to reject the proposal, pro-tobacco advocacy groups have put forward the argument that these tax increases would primarily affect the most vulnerable populations in the state. While this argument is recurrent on the part of the tobacco industry, it is nonetheless erroneous. People in precarious situations are the first beneficiaries of tax increases. Indeed, they are more sensitive to the price argument and are more likely to stop smoking following tax increases. Finally, advocacy groups have stressed that a tax increase could weaken small local businesses. These arguments are not actually supported by any tangible evidence. Tax increases are accompanied by more economic benefits than perverse effects.[2].

[2] Smith KE, Savell E, Gilmore AB. What is known about tobacco industry efforts to influence tobacco tax? A systematic review of empirical studies. Tob Control. 2013;22(2):144-153. doi:10.1136/tobaccocontrol-2011-050098