Why increase the tobacco tax? Colorado is facing a growing health care crisis. More than half a million of our state’s citizens, young and old and across a widening economic range, do not have access to the basic health care and services they need. Meanwhile, Colorado has the lowest cigarette tax in the country. Raising the tobacco tax by 64 cents per pack of cigarettes and 20 percent on other tobacco products will bring Colorado in line with the national average and provide a new revenue stream for funding important health care programs.
Why tobacco? Why not alcohol, or food?
· Every year, more than 4,000 Coloradans die from tobacco-related illness, according to the Colorado Department of Public Health and Environment (CDPHE).
· According to figures from the federal Centers for Disease Control (CDC), approximately $1 billion is spent annually in Colorado on health expenditures directly related to smoking.
· Every year, more than 10,000 Colorado teens become regular smokers, according to the state health department.
· One in three people who start smoking as teens will die prematurely because of it, according to the CDC.
The cost of smoking affects every single person in Colorado, and it’s completely preventable. We especially want to minimize the number of youth who begin smoking. Experience in other states has shown that, when the price of cigarettes rises, kids are more likely than any other group to stop purchasing them. We think these are all very strong reasons to raise the tax on tobacco products.
Have other states done anything similar? How have tobacco tax increases fared elsewhere? More than 30 other states have raised tobacco taxes in just the last two years. In the last two years, only one state-Missouri-has tried and failed to pass an initiative to raise tobacco taxes.
Why a constitutional amendment?
· Putting something like this in state statute doesn’t protect the funds from being used for other purposes if the legislature votes for that. With a constitutional amendment, we know the funds will be used as Colorado’s voters direct.
· Statewide polling shows that voters prefer a constitutional amendment 2-1, because voters want to ensure that the money is spent as promised.
· This is a new and dedicated stream of revenue. Unlike some constitutional measures, Amendment 35 will not have a negative impact on the state budget. In that respect, it is akin to the Great Outdoors Colorado Amendment, except that its focus is health care and kids.
Shouldn’t the legislature have a say in how tax revenues are spent? After all, that’s what they’re there for.
We’ve built flexibility into our amendment by allowing the legislature, with a two-thirds majority and approval of the governor, to use the money for general health care needs in times of economic crisis. But we believe it’s important to dedicate this new source of revenue by writing into the state constitution how it shall be spent. That will ensure that the funds are used as the voters intend.
How much money will be generated by the tax and how will it be used? The tax on cigarettes will be raised by 64 cents per pack, bringing the total to 84 cents per pack (the national average tobacco tax is 79.3 cents per pack and in non-tobacco producing states the average is 87.7 cents per pack). The tax on other tobacco products, such as cigars and chewing tobacco, will be raised by 20 percent. The tax increase will generate approximately $175 million per year in new revenue.
The new revenue will be used as follows:
· 46 percent ($80.5 million) for public health insurance expansion (through the Child Health Plan Plus and Medicaid)
· 19 percent ($33.25 million) for comprehensive primary care through clinics across the state
· 16 percent ($28 million) for tobacco education, prevention and cessation programs
· 16 percent ($28 million) for prevention, early detection and treatment of Cancer and cardiovascular and pulmonary diseases
· 3 percent ($5.25 million) to general fund, old age pension fund and municipal and county governments (to compensate for tax revenue reductions due to lower consumption rates once this new tax is in place)
How much will a pack of cigarettes cost after the tax increase? That depends on the brand and where it’s purchased. Name-brand cigarettes generally cost upwards of $2 right now in most Colorado stores.
Didn’t a bill pass the state legislature that would change the way the money is used if your tax passes? Yes. House Bill 1455 was rushed through the legislature in the last days of the session. It would allow the new revenue from our tobacco tax to be used primarily to backfill funding for the Child Health Plan Plus (CHP+) and Medicaid. It allows the legislature to take the new revenue designated to expand CHP+ and Medicaid and instead use those dollars to replace current funding. Additionally, a portion of the dollars for increased clinic funding may be taken to replace current clinic funding.
We believe HB 1455 clearly interferes with the initiative process. However, we don’t intend to file suit against the bill. We’d prefer to work with the legislature once our initiative passes, to ensure legislators listen to the will of the people and funds the expansion of programs that are important to so many Colorado families.
How will you ensure that the money is being used properly without creating more bureaucracy?
If passed, the amendment will utilize existing state infrastructure to administer the programs. The funds will be administered by state agencies that have rigorous reporting and evaluation mechanisms already in place. The oversight of each program is as follows:
· The public health insurance expansion will be administered through Colorado’s Children’s Basic Health Plan and Medicaid programs.
· The primary care through clinics program will be administered by the Department of Health Care Policy and Financing.
· The tobacco education, prevention and cessation program will be administered by the Colorado Department of Public Health and Environment.
· The prevention, early detection and treatment of cancer, cardiovascular and pulmonary disease program will be administered by the Colorado Department of Public Health and Environment.
Is this a “regressive” tax, meaning does it disproportionately impact minorities and/or lower income Coloradans? It’s undeniable that sales and excise taxes-such as taxes on tobacco, alcohol and food-are regressive.
But, let’s look at how a tax like ours works out in practice. Experience in other states shows that smokers with family incomes at or below the national average are four times more likely to quit because of cigarette price increases than those with higher incomes.
More importantly, lower-income Coloradans stand to gain a lot from this initiative. Most of the health programs funded with the new tobacco tax revenue are targeted at lower-income Coloradans. And Colorado’s highly effective tobacco prevention and cessation program, which offers free assistance to smokers who want to quit, will be funded by this money.
The tobacco industry says it opposes higher cigarette taxes because it cares about low-income families. But these are the same companies that have aggressively marketed to poor communities for decades.
Won’t this tax increase drive smokers to buy their cigarettes in other states or on the black market? Because Colorado’s tobacco tax rate is so low currently, we are the source for the black market in other states. That is not something this state should take pride in. This initiative addresses that by bringing Colorado’s tobacco tax rate in line with our neighboring states.
In terms of smokers’ willingness to drive out of state to buy tobacco, studies show that immediately after a substantial increase in the price of tobacco, there may be an initial effort by smokers to go across state borders to buy cigarettes. But those cross-border purchases gene
rally fade as smokers go back to their usual habit of buying cigarettes at the corner store. (Incidentally, about two-thirds of all cigarettes sold in the United States are single packs, so the idea that smokers will stock up on packs purchased outside Colorado is not valid.)
Do you think you can win? Three polls conducted in the last 15 months-the most recent just mid-August-have all indicated strong support for this initiative.
The strength of this support is particularly striking given that survey respondents supported the measure, not based on the concept, but after being read the actual ballot language as it will appear on this fall’s ballot (“Shall state taxes be increased $175 million annually through additional tobacco taxes imposed for health related purposes, and, in connection therewith, amending the Colorado constitution to increase statewide taxes on the sale of cigarettes by wholesalers of three and two-tenths cents per cigarette and on the sale, use, consumption, handling, or distribution of other tobacco products by distributors at the rate of twenty percent of the manufacturer’s list price&”).
Additionally, there is national momentum behind this movement. More than 30 states have passed new tobacco taxes in the last two years.
Who is leading and supporting this effort? A strong steering committee of more than 30 health care experts, business leaders, policy analysts and advocates representing more than 20 statewide organizations came together in the summer of 2003 to build this initiative. In addition, more than 100 organizations from around the state-led by the American Cancer Society, American Heart Association, American Lung Association and The Children’s Hospital-have endorsed the initiative. The campaign co-chairs are Barbara O’Brien, president of the Colorado Children’s Campaign, and Al Yates, president emeritus, Colorado State University.