Oregon Gov. Kate Brown is embracing a proposal by the Oregon Health Authority to raise cigarette taxes — but she’s rejecting the agency’s bid to raise alcohol taxes.
Brown said she buys the agency’s argument that smoking is a major factor in driving up health care costs in Oregon and that tobacco taxes should play a bigger role in helping fund the Oregon Health Plan.
But the governor said that increasing taxes on beer, wine and cider faces too many political hurdles.
“I know the beer and wine tax hasn’t been increased in 30-plus years,” Brown said during a conference call with reporters Friday. “The challenge for that particular arena is that we just don’t get enough bang for the buck … It’s a tough fight at the Legislature and we’re not likely to be successful.”
Brown is referring to the fact that even if a bill passes the Legislature, it can still wind up on the ballot if opponents collect enough signatures for a referendum.
The governor said she is finalizing her budget, which she plans to release on Nov. 28. She did not provide any specifics on a cigarette tax hike. But people familiar with the discussions said it will follow along the lines of the proposal made by the health authority.
Agency leaders proposed raising the state tax — now set at $1.33 per pack — by $2. That would put Oregon much closer to California and Washington, both of which levy taxes of around $3.50 a pack.
The agency estimates that this would raise $293 million in the next two-year budget cycle and help discourage people from smoking. It estimates that the tax hike would help cut smoking among members of the Oregon Health Plan — which covers low-income residents — and save more than $50 million a year in the plan’s costs.
Public health groups have also long pushed for increases in beer and wine taxes, which are among the lowest in the country. But they’ve always faced a lot of political pushback from the craft beer and winemaking industries, both of which have become nationally prominent. Beer and wine distributors are also major donors to legislative campaigns.
The health authority proposed beer, wine and cider taxes that would raise retail prices by about 10 percent. Under the agency’s proposal, the tax would also automatically rise with inflation.
Lawmakers will take up the governor’s budget after their session begins in January.