A measure on the November ballot would create Oregon’s first tax on electronic nicotine products and dramatically raise taxes on cigarettes.
The measure’s backers have touted what appears to be its wide support, as evidenced by the more than 260 health care organizations that stand behind it, the lead political action committee’s eight-digit war chest and results of a survey of 1,000 likely voters, a majority of whom said they supported the measure.
Opponents of the tax have mounted almost no campaign, raising just $7,000 and inserting two arguments against it in the state voter’s pamphlet, compared to 49 yes arguments from proponents.
A 2007 ballot measure that aimed to get voters to increase cigarette taxes was crushed by a then-record $12 million opposition campaign by the tobacco industry.
But tobacco companies haven’t spent a dime this year to derail the proposed tax increase. Democratic lawmakers' decision last year to kill a bill banning flavored vapes, an anathema to tobacco companies, may have been a factor.
Stephanie Vandehey, a spokeswoman for the political group promoting Measure 108, said the proposed taxes on tobacco and vaping products would benefit young people, smokers and Oregonians with state-funded health care.
Taxing vaping products would increase prices for buyers, which would make it less affordable, especially for young people, and could help curb what health officials have said is an ever-growing epidemic.
Some of the money raised through the tobacco and vaping taxes would be directed to state health programs to help people quit nicotine products. And the state’s Medicaid program – the Oregon Health Plan – would reap hundreds of millions per biennium.
“It’s a win, win, win,” Vandehey said.
If voters approve the measure, the state would tax all nicotine vape products, including nicotine-containing liquids and the devices people use to vaporize them, at 65% of a product’s wholesale price.
The measure would also raise cigarette taxes by $2 a pack, from $1.33 to $3.33, and double the tax on cigars to $1 each.
As of last December, Oregon ranked 32nd among the states and the District of Columbia for the highest tobacco tax rates, according to data from the U.S. Centers for Disease Control and Prevention. If the ballot measure passes, Oregon would have the highest rate outside of the Northeast and the sixth-highest rate nationally.
The tax would not apply to marijuana-based products, which have their own separate tax structure.
Proponents of the tax hike have raised more than $13.4 million to promote the measure since October 2019, most of it from health care systems, including $3.3 million from Providence Health & Services, $1.7 million from Legacy Health and $1 million from PeaceHealth.
The only political action committee campaigning against the proposal, No On 108, has raised $7,000 from four vape shops, one of them in Medford, one in Roseburg and two in Portland.
The opposition committee’s founder, Jason Weber, said the tax would do immense damage not only to retailers but also to people who have successfully quit smoking cigarettes thanks to the products like the ones he sells at his two stores in Roseburg.
Vaping products have fewer chemicals than cigarettes, according to the U.S. Centers for Disease Control and Prevention, and switching to them completely can benefit cigarette smokers.
“Everybody’s perception is that vaping is bad,” Weber said. “I’m just trying to get the facts out there.”
He is aware of the overwhelming support in favor of the measure and the resources its backers have.
State lawmakers last year opted to place the tax hike on the Nov. 3 election after kicking the tires on a similar tax plan in 2017. State officials last tried to increase cigarette taxes in 2007 but voters rejected the measure amid a then-record $12 million opposition campaign by the tobacco industry.
This year, however, tobacco companies aren’t spending to oppose the tax hike, and neither the proponents, opponents nor politicians seem to know why.
Vandehey hypothesized that the tobacco companies know that most Oregonians are in favor of higher tobacco taxes. Echoing that thought, Weber said the companies likely gave up knowing they stood little chance against Oregonians' support for increased tobacco taxes.
Also notable is that lawmakers last year killed a proposal that would have dealt a blow to an up-and-coming source of tobacco industry revenue: vaping products.
A bill to ban flavored vaping liquids, sponsored by Sen. Laurie Monnes Anderson, a nurse and Gresham Democrat who chairs the Senate Committee on Health Care, died in committee after she announced Democrats could not muster the 18 votes needed to pass tax measures.
Monnes Anderson said this week that lobbyists with the Oregon Nurses Association and the American Cancer Society pushed her and other lawmakers to gun for the tobacco tax bill instead of the flavored vapes ban. Those lobbyists' efforts likely killed any prospects that her bill would pass, she said.
Monnes Anderson said this week that she is not sure if tobacco companies agreed not to actively oppose the Measure 108 tax if lawmakers killed the proposed ban on flavors.
“I’m not privy to those kinds of conversations,” Monnes Anderson said.
A spokesman for Altria, one of the world’s largest tobacco corporations, said the company opposes Measure 108 and any tax that is unfair to consumers and expensive for business and that could encourage black market trade and destabilize state finances.
Spokesman David Sutton did not answer a question about why Altria was not fighting the Oregon tobacco and vapes tax hike measure.
Tobacco sales in Oregon have been declining for years now, with 38 packs sold per person in 2017, according to state data, down from 56 per person in 2007. Nearly 16% of Oregon adults smoked in 2018, according to the U.S. Centers for Disease Control and Prevention, putting the state 30th in the nation for smoking rates.
Of the approximately $330 million the state estimates the tax would raise in the 2021 to 2023 biennium, 10% would be dedicated to tobacco prevention and cessation programs and the rest would go towards funding the Oregon Health Plan, which is the state’s government-funded health care plan for low-income Oregonians.
The vast majority of the revenue would come from the cigarette tax increase, according to estimates by the Legislative Fiscal Office in 2019.
-- Fedor Zarkhin | fzarkhin@oregonian.com | 503-294-7674