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Mar-30-2011 20:41printcomments

Oregon Considers Controversial Tobacco Tax Increases

HB 2385 would allow counties to impose their own excise tax on tobacco products.

Tobacco tax

(SALEM, Ore.) - A flurry of tobacco tax bills with conflicting objectives is under consideration by Oregon state legislators who should say ‘no’ to any new taxes, according to the International Premium Cigar & Pipe Retailers Association.

Oregon currently taxes cigarettes at the rate of $1.18 per pack. One of the bills being considered would hike the tax by an additional $1. One of the bills also contains tax increases on other tobacco products. For example, HB 2110 proposes to increase the excise tax on other tobacco products from 65% to 120.25% of the wholesale price, while retaining the present cigar tax cap of 50 cents.

“While the cigar tax cap remains, this increase would prove detrimental to the sale of pipe tobacco and other tobacco products. Even the current 65 percent tax is a tremendous challenge to retail tobacconists in the state,” said Chris McCalla, legislative director of the IPCPR. “If their goal is to raise additional tax revenues, they need to keep the rates reasonable or sales will plummet.”

HB 2385 would allow counties to impose their own excise tax on tobacco products.

McCalla said, “To potentially impose taxes on taxes on taxes would be beyond the endurance of any business owner, any consumer, any constituent in the state of Oregon or anywhere.”

Some supporters of a cigarette tax increase are said to be more interested in curbing smoking than raising additional funds, according to a report by the Association for Convenience and Fuel Retailing. The report also cited one of their former members who claimed the previous tobacco tax increase contributed significantly to the closure of his stores and layoffs of his employees.

“Premium cigars and pipe tobacco are unique tobacco products that are considered more of a hobby than a habit. If they are overtaxed, consumers will obtain them through illegal sources such as bootlegging or the Internet. Either way, the state loses revenues, retailers lose business and jobs and businesses are at stake,” McCalla pointed out.

McCalla urged Oregon voters to contact their state legislators asking them to vote against any tobacco tax increases or any legislation that would extend taxability of tobacco products beyond the state level.

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