Since Gov. Kate Brown unveiled a plan to hike taxes on cigarettes and other tobacco products last year, little public opposition has emerged.
That changed Wednesday, in the first public hearing on several bills that would raise cigarette taxes by $2 per pack, eliminate caps on cigar taxes, and create the state’s first-ever tax on vaping products. Business owners showed up in force to the hearing before the House Revenue Committee, warning of layoffs, closures and dire consequences for low-income Oregonians if the taxes are passed.
Meanwhile, supporters showed up too, voicing many of the arguments that Brown and her administration have made for months: That higher tobacco and vape taxes can spur people to quit, stop young people from ever starting, reduce medical costs, and help fund health care for low-income Oregonians.
“Our current cigarette tax rate is among the lowest in the nation,” Brown told the committee at the outset of the hearing. “Raising the tobacco tax by $2 per pack will put Oregon on par with nearby states. It’s an effective and proven way to get people to quit smoking.”
Under the governor’s proposal, HB 2270, cigarette taxes in Oregon would rise to $3.33, making the state comparable to Washington and California. The bill would eliminate a 50 cent cap on taxes for premium cigars, which could increase their price by several dollars. And it would extend the 65% wholesale tax Oregon currently applies to many tobacco products to e-cigarettes.
Four other bills being considered this year accomplish pieces of HB 2270, including a proposal that would implement a 95% tax on e-cigarettes and other vaping products.
Supporters of the proposals focused on health outcomes, and say higher prices will give smokers the boost they need to quit.
"Ultimately I am tired of seeing my patients, too often the working poor who are targeted by big tobacco in their youth, die premature and painful deaths,” said state Rep. Rachel Prusak, D-West Linn, a nurse practitioner. “This weighs on me every day.”
Many proponents mentioned an oft-cited 2001 study, that suggested that a 10% increase in cigarette prices can reduce adult smoking between 3% and 5% — and have a more potent effect on youth. The tax increase being considered this year is roughly 150%.
Proponents also mentioned the emerging use of e-cigarette products among school-aged children as an emerging health crisis. According to the U.S. Food & Drug Administration, e-cigarette use among high school and middle school students rose sharply between 2017 and 2018.
“Higher prices make these devices less attractive for young people, and that’s a good thing for their lifelong health,” said Dr. Jennifer Vines, Multnomah County’s deputy health officer.
But opponents lined up to warn of a host of unintended consequences.
Jonathan Polonsky, CEO of the Plaid Pantry chain of convenience stores, called the proposed tax hikes “unprecedented and just not fair.” He said his store relies not only on cigarette sales, but also the additional purchases smokers make while buying a pack.
Polonsky and others said that Oregon wouldn't make as much money as planned under the proposal, since Washingtonians who come to Oregon seeking cheaper cigarettes will no longer make the trip. Brown has suggested that tobacco taxes could bring in nearly $175 million more per year under the plan, and has made them a key anchor in her push to find longer-term funding for Oregon's Medicaid system, the Oregon Health Plan.
Other opponents included the Oregon Small Business Association, and trade groups representing the cigar industry. Especially vocal were vape shop owners, who say they’re helping people quit cigarettes and shouldn’t be targeted.
“I help people quit smoking for a living,” said Jason Weber, who told lawmakers he owns two vape shops in Douglas County. “Smoking is the number one most preventable cause of death. Smoking, not vaping. I find it crazy that I’m here opposing a 95% tax on my business.”
But others, including several high school students, painted products like Juul as a gateway to nicotine addiction and cigarette use.
“They’re small, easily accessible and they look just like flash drives,” one student from Beaverton's Westview High School testified. “I’ve seen students take many trips to the bathroom to satisfy their unknown addiction to nicotine.”
Though a tobacco tax hike is a key focus of the governor, there's uncertainty over how palatable it will be to lawmakers in a year when many are focused on finding billions for schools and enacting an extremely complex cap-and-trade system. A tax hike would need three-fifths support in the House and Senate to pass outright, and there is some thought that legislators are more likely to refer the matter to voters than do it on their own.
That would essentially create a rematch of a 2007 ballot measure that sought to raise cigarette taxes by 85 cents per pack. The measure was shot down by voters after heavy spending by tobacco companies.