News: Four States Have Tobacco Tax Hikes on the Ballot on Election Day

With Election Day less than one week away, all eyes are on the presidential race and, to a lesser extent, which party will control the House and Senate next year. But voters in four states will also be weighing in on ballot questions that, if passed, would hike tax rates on tobacco products, including cigars.

California Proposition 56

Anti-tobacco zealots hope to increase cigarette taxes $2 per pack, from $.87 to $2.87. Other tobaco products (OTP), a tax category that includes cigars, would face a corresponding 230% increase. Critics say the tobacco tax hike “lines the pockets of special interests, but fails to address pressing needs facing California families, like fixing schools, roads, water storage, and violent crime.”

North Dakota Measure 4

North Dakota’s Initiated Measure 4 would increase the tax on cigarettes 400% from 44 cents per pack to $2.20. All other tobacco products, including cigars, e-cigarettes, and vaping products, would see state taxes double from 28% of the wholesale purchase price to 56%. Although proponents say the money will be spent on smoking cessation, opponents point out that the measure contains “nine pages of print that only detail four sentences as to how and where this money will be spent,” leading to wide discretion for bureaucrats and politicians to potentially spend the money on pet projects.

Colorado Amendment 72

In Colorado, anti-tobacco forces are trying to alter the state constitution to include triple taxes on tobacco products. The amendment would increase the tobacco tax by $1.75 per pack of 20 cigarettes, from 84 cents to $2.59, and jack up taxes on other tobacco products, including cigars, by 22% of the wholesale list price, on top of the existing 40% tax already in effect. Those against the amendment note that the tax would disproportionately impact low-income people, and that because the revenue would be earmarked in the constitutional ammendment, it couldn’t be directed to government programs where it might be put to better use.

Missouri Proposition A

Missouri’s Proposition A would more than double taxes on cigarettes from 17 cents per pack to 40 cents, with the increase being phased in through 2021. Taxes on OTP, including cigars, would increase by 5% of the manufacturer’s invoice price to 15%. In part because the proposition would automatically repeal the additional taxes if a measure to increase any tax or fee on cigarettes or other tobacco products is certified to appear on any local or statewide ballot, many of the anti-tobacco forces that usually back higher taxes on tobacco actually oppose Proposition A as an impediment to even higher taxes later.

Missouri voters will also vote on Amendment 3, which would hike tobacco taxes 400% from 17 cents to 77 cents, with extra fees being applied to companies not subject to the master agreement settlement with the state. Because it does not impact cigar taxes, many cigar-oriented trade groups, like the International Premium Cigar and Pipe Retailers Association (IPCPR), don’t take a position on Amendment 3. Under Missouri law, if both Amendment 3 and Proposition A pass, the one that passes with the higher percentage takes effect.

As you’d expect, groups like Cigar Rights of America (CRA) and the IPCPR oppose all four ballot questions that would add additional taxes to cigars, which (between state and federal taxes) are already taxed at record-high levels. Opponents of such tobacco taxes point out that they are highly regressive (by impacting those who can least afford them the most) while threatening to put cigar shops out of business, and that if additional revenue is needed a fairer approach would be a broad-based, more evenly-distributed tax instead of one that hits an already targeted minority.

Cigar smokers in California, North Dakota, Colorado, and Missouri should exercise their right to vote NO on Tuesday to prevent further punitive taxes on cigars.

–Patrick S

photo credit: Stogie Guys