Voters to decide whether to triple state’s cigarette tax
August 22, 2016
DENVER — Colorado voters will decide in November whether to triple cigarette taxes after tobacco sales rose for the first time since the last state tax increase in 2004.
An initiative certified Monday for the November ballot would raise the state tax from 84 cents to $2.59 per pack starting Jan. 1. That's nearly a dollar more than the $1.63 national average, according to the state health department.
Taxes on cigars and chewing tobacco would rise 22 percent.
The Campaign for a Healthy Colorado, a coalition of health groups and professionals, says its initiative would generate $315 million next year for existing tobacco prevention and cessation programs. Colorado collected $165 million in cigarette taxes in 2013, according to the independent Colorado Fiscal Institute.
Funds also would be spent on cancer, heart and lung disease research and treatment, Alzheimer's research, youth mental health services, veterans medical care and student debt repayment for medical professionals serving rural areas.
Annual tobacco use in Colorado declined from 300 million cigarettes in 1990 to 193 million in 2014, according to the Colorado Department of Public Health and Environment. The percentage of adult tobacco users declined from 20 percent in 2004 to nearly 16 percent in 2014.
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But sales rose last year by more than 1 million cigarettes to 194 million, the health department reported. Per-person sales are stable, but Colorado's growing population and research suggesting cigarette tax hikes lose their effectiveness after 7 or 8 years are behind the rise, said David Brendsel, a department spokesman.
Experts say making smoking more expensive cigarettes deters youth from taking up the habit and encourages smokers to quit. The Campaign for Tobacco-Free Kids, which is backing the initiative, says each 10 percent hike in cigarette prices reduces overall cigarette use by up to 5 percent and up to 7 percent among youth.
"Colorado ranks 38th in the nation in cigarette tax. We know that significantly increasing taxes are a proven way to reduce smoking and stop tobacco companies from getting more kids addicted," campaign spokeswoman Myung Kim said.
The average cost of a pack of cigarettes in Colorado is about $5.26. The increase would bump that to about $7.01 — an increase of about $640 a year for people who smoke a pack a day — if cigarette makers pass along the full amount to consumers.
In 2015, Colorado collected $88 million under the 1998 Tobacco Master Settlement Agreement, in which states released cigarette manufacturers from health-related claims in exchange for annual payments.
State budget writers warn that those settlement payments, which are pegged in part to tobacco use, will continue to decline. Colorado's estimated share will drop to $72 million in 2018, according to legislative economists.
The same can be expected if voters approve a tax hike, said Democratic Sen. Pat Steadman of Denver, who sits on the Legislature's Joint Budget Committee.
"This new tax would be hefty enough to have some readily detectable impact on youth smoking," he said. "It's a policy I support. The problem is that as you raise taxes, you have to plan ahead on a diminishing revenue stream."