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THE DAILY ASTORIAN • TUESDAY, OCTOBER 30, 2018
State seeks tax increase on alcohol, cigarettes
A drive against
smoking and
binge drinking
By CLAIRE
WITHYCOMBE
Capital Bureau
SALEM — State health
officials say they want a sub-
stantial tax to drive down
smoking and binge drinking.
About 20 percent of Ore-
gonians smoke, exceeding the
national average and increas-
ing their risk for strokes, lung
cancer and heart disease. It’s
the state’s highest cause of
preventable death.
And in a state renowned for
hoppy IPAs and fruit-forward
pinot noirs, alcohol-related
deaths have climbed about 38
percent since 2001, accord-
ing to the Oregon Health
Authority.
Nearly 2,000 people died
from alcohol overuse in the
state in 2016, making it Ore-
gon’s third most common
cause of preventable death.
State officials think they
can use tax policy to improve
public health and reduce
health care costs.
“The purpose of this was
to use this as a lever to cut
down consumption,” said Pat
Allen, Oregon Health Author-
ity director.
But the success of such
policies, or “sin taxes,” may
depend on whether price
increases are significant
enough to deter consumers,
and whether smokers or drink-
ers can find products else-
where at lower prices.
Nationally, alcohol taxes
haven’t increased much since
the 1990s, which makes it
more challenging to under-
stand drinkers’ sensitivity to
price increases, said Benjamin
Hansen, a professor of eco-
nomics at the University of
Oregon.
The efficacy of tobacco
taxes may also be changing
with the growing popular-
ity of largely untaxed alterna-
tives like e-cigarettes and vape
Oregon Liquor Control Commission
State health officials say they want a substantial tax to
drive down smoking and binge drinking, two leading
causes of preventable death for Oregonians.
pens, which typically have
less nicotine and are marketed
as less harmful.
Those products aren’t cur-
rently taxed in Oregon, accord-
ing to the Public Health Law
Center, but the health author-
ity is proposing to tax them.
Hansen said policymakers
should also consider whether
tobacco consumers could get a
similar product more cheaply
on the black market, online or
in another state.
Not a long-term
strategy
A successful “sin tax”
doesn’t work as a long-term
strategy for the state budget.
“The better these taxes are
for health, the worse they are
for revenue,” Hansen said.
The health authority wants
to increase taxes on beer, wine
and cider by 10 percent, which
officials estimate could raise
$491 million over two years.
The agency also wants to
raise $293 million through a
$2 per pack tax on cigarettes, a
tax on “inhalant delivery sys-
tems” like e-cigarettes, and
removing the 50-cent limit on
taxes per cigar.
Oregon’s cigarette taxes
rank about 30th among states,
according to the Tax Foun-
dation, a Washington, D.C.,
think tank. Idaho is the only
neighboring state with lower
cigarette taxes.
Advocates maintain tax
increases dissuade people
from smoking.
“A substantial body of
research, which has accumu-
lated over many decades and
from many countries, shows
that significantly increasing
the excise tax and price of
tobacco products is the sin-
gle most consistently effective
tool for reducing tobacco use,”
according to a 2017 study by
the World Health Organization
and the National Cancer Insti-
tute. “Significant increases
in tobacco taxes and prices
reduce tobacco use by leading
some current users to quit, pre-
venting potential users from
initiating use, and reducing
consumption among current
users.”
The health authority’s pro-
posal would tax vape pens and
e-cigarettes that are seen as a
lower-nicotine alternative to
cigarettes or cigars.
The health authority is bud-
geting about $29 million of the
taxes for tobacco and chronic
disease prevention. The Leg-
islature would decide how to
distribute the rest.
The state also has some
of the lowest alcohol taxes in
the country, according to the
health authority. Beer taxes
remain at the same level they
were in 1977 and the rate for
wines was last changed in in
1983.
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“In real terms, beer and
wine taxes fall every year
because they do not keep up
with inflation,” the health
authority’s budget proposal
states. The proposal includes
automatic tax increases to
account for inflation.
The agency said a 10 per-
cent increase in the price of
alcohol would reduce exces-
sive drinking by 5 percent.
They said such alcohol abuse
costs the state’s economy
about $3.5 billion every year.
The agency said the tax
increase would reduce by $287
million a year costs “related to
lost productivity and absen-
teeism, premature death,
health care, crime, motor vehi-
cle crashes and fetal alcohol
syndrome.”
The agency proposes
spending $49 million more on
alcohol and drug treatment.
The rest would be distrib-
uted under an existing for-
mula to the state general fund,
which pays for general state
operations, and cities and
counties.
As proposed, the tax
increases on alcohol and
tobacco would be one of the
largest state tax hikes in recent
times.
Some prior tax bills have
been comparable in scale.
In 2009, lawmakers raised
income taxes by about $801
million for the biennium.
And last year’s transporta-
tion package, which included
several tax increases, was
designed to raise more than
$5 billion over 10 years. In
the next two-year budget, it’s
expected to raise $910 million.
Big lift
It’s not easy to raise taxes
in Oregon, because those mea-
sures require approval from
60 percent of the lawmakers
in the state House and Senate.
Taxes on tobacco and alcohol
are an especially big lift.
In 2016, Gov. Kate Brown
proposed raising cigarette
taxes by 85 cents per pack, but
that did not come to fruition,
and taxes remain at $1.33 per
pack.
Brown’s office didn’t
respond to written questions
about whether the gover-
nor supported the proposed
tax increases on alcohol and
tobacco.
“Agencies drive the con-
tent of their proposals, and
our office is not in the habit of
striking ideas down or esca-
lating them until the appropri-
ate point, which takes place
when the governor finalizes
her budget from a wide list of
options that agencies bring to
the table,” spokeswoman Kate
Kondayen wrote in an email.
Allen said he and his staff
have discussed the proposal
with her staff but got no direc-
tion on it from the governor or
her office.
The Capital Bureau is a
collaboration between EO
Media Group, Pamplin Media
Group and Salem Reporter.
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