Oregon Legislature Revives Tobacco Tax Increase, Could Send to Voters

The Oregon Legislature has breathed new life into a bill proposed by Gov. Kate Brown that would drastically increase the state’s tobacco taxes, including removing the 50-cent cap on cigars and taxing them at one of the highest rates in the country.

Except it won’t be legislators that will ultimately decide the increase; rather, it will be voters.

The bill, HB 2270, was heard in the House Committee on Revenue on Thursday, and it was there where it received the amendment that would require voters to decide the increase during the 2020 election. In order to be sent to the ballot, both chambers would need to pass the bill by a three-fifths majority, a number that members of the Democratic party currently hold in both the House and Senate. The amendment is seen as a way to get moderates on board by ultimately letting voters decide whether to raise the tax.

The central part of the bill is a $2-per-pack increase in the tax on cigarettes, going from $1.33 to $3.33 per pack, as well as defining e-cigarettes and other nicotine vaping products as tobacco products in order to impose the state’s tax rate of 65 percent on those products.

For cigar smokers, the bill would remove the 50-cent cap on the cigar tax and subject them to the full brunt of the state’s tax rate. In the case of a cigar with an MSRP of $9.50, the cigar would jump from $10.50 at the register to $15.68, by halfwheel estimates.

Additionally, it would require that all cigars sold individually in the state have a minimum wholesale price of $3, unless they are sold in a package of four that has a minimum wholesale price of $12.

Should the legislature pass the bill and voters approve the ballot measure, the increase would go into effect on Jan. 1,  2021.

The bill is slated for a hearing in the Joint Committee on Tax Expenditures, then would go to the House floor for a vote.