Gov backs $2 tobacco tax hike to fund Medicaid

SALEM, Ore. (AP) – Oregon is exploring an additional $2 tax on cigarettes to help fund the state’s Medicaid program.

Gov. Kate Brown said Wednesday the proposed tax would bring in $346 million every two years. She adds that higher cigarette prices will also encourage smokers to quit the habit.

The plan would also implement a 65% tax on the wholesale price of e-cigarettes as a way to combat teen vaping rates.

Most of the money would fund Oregon’s Medicaid program, which covers health insurance for low-income individuals. Oregon has faced rising Medicaid costs after a drop in federal contributions.

Business groups slammed the idea and said the tax increase will hurt small businesses and only encourage consumers to find tobacco products elsewhere.

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News release from Gov. Kate Brown:

Governor Brown: House Bill 2270 Will Improve Health and Save Lives Bill increases tobacco tax, creates tax on e-cigarettes

(Salem, OR) — Governor Kate Brown today detailed her support for House Bill 2270, which raises the cost of tobacco products in Oregon to improve health and stabilize funding for the Oregon Health Plan.

“House Bill 2270 will improve health and save lives,” Governor Brown told the House Revenue Committee. “Tobacco is still the No. 1 preventable cause of disease and death in Oregon. By increasing the cost of tobacco products and e-cigarettes, House Bill 2270 not only provides the funding we need to continue to provide health coverage to Oregonians, it invests in prevention and cessation to improve the health of our communities.”

House Bill 2270 is the third part of Governor Brown’s proposal to provide long-term sustainable funding for the Oregon Health Plan. Governor Brown signed the first two pieces, in House Bill 2010, last month. The fourth component, the Employer Health Care Responsibility Act (House Bill 2269), is a spending requirement on employers who do not contribute a minimum amount toward the health care costs of their employees.

In addition to raising the cigarette tax by $2 per pack, House Bill 2270 for the first time taxes e-cigarettes. The U.S. Surgeon General reports that 1 in 5 high school students and 1 in 20 middle school students use e-cigarettes.

House Bill 2270 is estimated to raise $346 million per biennium. While 90 percent of the revenue will go to the Oregon Health Plan, 10 percent will go toward investments in tribes, culturally specific organizations, and state and local public health to expand cessation efforts.

Click here to read the full testimony.

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News release from the American Cancer Society:

American Cancer Society Cancer Action Network Urges Oregon Lawmakers to Support $2 Tobacco Tax Increase

Cancer Advocates Make Personal Plea During Public Hearing to Raise Cigarette Tax by $2 Per Pack with Equal Tax on E-cigarettes

SALEM, Ore.–April 10, 2019– The American Cancer Society Cancer Action Network (ACS CAN) urges Oregon lawmakers to support a proposed tobacco tax increase that will help reduce tobacco use, save lives, lower health care costs and raise revenue. At a public hearing on April 10 and April 11, cancer advocates will share personal stories and testimony about the devastating impact of tobacco use on their families, including losing fathers and other loved ones from tobacco-related cancers.

Lawmakers are considering House Bill 2270 to raise the price of cigarettes by $2 per pack and increase the tax on electronic cigarettes by an equal amount. The tax will help fund the state’s Medicaid program. Revenue will also help fund critical tobacco prevention and cessation programs in the state.

“Tobacco use is the number one cause of preventable death in our state,” said Christopher Friend, Oregon government relations director for ACS CAN. “This year alone, 7,500 Oregonians will die from smoking, which also causes about 28% of cancer deaths in the state. We know that one of the most effective ways to help people quit and keep young people from starting is by making all tobacco products significantly more expensive with regular tax increases.”

According to projections from ACS CAN, a $2 per pack cigarette tax increase would help 31,300 adults quit smoking. It would prevent more than 19,000 Oregon kids under age 18 from becoming daily smokers and reduce overall youth smoking rates by nearly 21%. Additionally, 13,700 lives would be saved from a premature death.

The revenue from the $2 cigarette tax increase would also be significant, generating nearly $173 million in new annual revenue while reducing health care costs. In fact, as smoking rates decrease from a $2 cigarette tax increase, the state would see about $1.02 billion in long-term health care cost savings.

“Oregon’s current cigarette tax is ranked 32 nd in the nation and falls below the national average,” Friend added. “We also don’t tax e-cigarettes, which are rampant in our schools, and we have not raised the tobacco tax by a large enough amount to reduce smoking since 2002. It’s time we reestablish ourselves as a leader in the fight against tobacco.”

Following this week’s public hearings, House Bill 2270 will be scheduled for a vote in the House Revenue Committee before being considering for a vote on the floor of the House of Representatives.

About ACS CAN

The American Cancer Society Cancer Action Network (ACS CAN) is making cancer a top priority for public officials and candidates at the federal, state and local levels. ACS CAN empowers advocates across the country to make their voices heard and influence evidence-based public policy change as well as legislative and regulatory solutions that will reduce the cancer burden. As the American Cancer Society’s nonprofit, nonpartisan advocacy affiliate, ACS CAN is critical to the fight for a world without cancer. For more information, visit www.fightcancer.org