Colorado Democrats Propose Nicotine Tax

On Thursday, June 11, Democrats in the state of Colorado, in the United States, presented House Bill 20-1427 (HB20-1427), relating to the taxation of cigarettes and nicotine products.[1]. However, we will have to wait until November 2020 to find out whether it will be voted on. Until then, tobacco industry lobbyists have room to interfere!

Taxes on cigarettes and nicotine products

HB20-1427 proposes to introduce a tax on nicotine products in the State of Colorado and to increase it regularly, in line with the existing tax on cigarette packs. Thus, the cigarette tax, which is currently 20%, or 84 cents on cigarette packs, is expected to increase to 30% in 2021 (1.94$), 36% in 2024 (2.24$), and 42% in 2027 (2.64$). In addition, the bill also sets the minimum price of a pack at 7$ and after July 1, 2024 at 7.50$, providing for penalties in the event of non-compliance with the minimum sale price. The tax on nicotine products, understood as products composed of nicotine that is ingested into the body, was modeled after the cigarette tax. In 2021, the tax is expected to correspond to 50% of the wholesale value, then 56% in 2024 and 62% in 2027.

What are the chances of the HB20-1427 project?

First of all, it is worth remembering that this bill will not be the only one to be put to the vote in November. Initiative 292[2] also plans to increase taxation of tobacco products, more abruptly at first, raising the tax on cigarette packs from 84 cents to 2.84$ on January 1, 2021, and then adjusting it thereafter according to the inflation rate[3]. The tax on nicotine products is expected to rise to 62% on July 1, 2020. The tobacco industry is also part of the picture, because the introduction of taxes on nicotine products such as e-cigarettes is not news that it welcomes. The reason for taxing tobacco products is to reduce consumption. Taxing alternatives to cigarettes aims to reduce consumer transfers and thus increase cessation rates. As a reminder, a bill similar to HB20-1427 did not leave tobacco industry lobbyists indifferent in 2019, and the bill was ultimately rejected [4].

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[1] https://leg.colorado.gov/bills/hb20-1427

[2] https://leg.colorado.gov/sites/default/files/initiatives/2020%2523292FI.00.pdf

[3] https://taxfoundation.org/colorado-tobacco-tax-bill-includes-positive-change/

[4] https://coloradosun.com/2020/06/11/tobacco-tax-bill-colorado-legislature-2020/

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