Outline of Testimony by John A. Charles, Jr. Regarding HB 2201

• Tobacco taxes present a moral hazard. By using this as a finance measure, legislators are clearly stating that they want Oregonians to buy as many cigarettes as possible.

• Smokers are disproportionately poor and less-educated, compared with the general population. They are the least able to defend themselves from the predations of a punitive majority.
• A drastic rise in the excise tax will encourage Prohibition-style tax evasion, smuggling, and violence.
• The only policy rationale for a tobacco tax is to reimburse the state or private parties for uncompensated health care costs associated with smoking. A mere 25 cent per/pack tax would do that.
• If subsidizing health care is worth doing, it’s worth doing through a progressive income tax. Alternatively, MSA funds should be re-directed.

Oregon’s MSA Tobacco Payment Allocations Fiscal Years 2002-2005
Program areas	FY 2002	FY 2003	FY 2004	FY 2005
Debt Service on Securitized funds	$0	$0	$7,603,713	$43,860,304
Education and Oregon Health Plan	$133,449,338	$95,530,949	$14,608,216	$27,600,000
Capital Projects At OHSU	$0	$2,500,000	$109,565,000	$0
Gen. Fund/Unallocated	$99,219,713	$0	$49,853,376	$51,248,402
Tobacco control	$0	$0	$0	$700,000
Total	$232,669,051	$98,030,949	$181,630,376	$123,408,706

In contrast, Pennsylvania received roughly $366 million in 2006 in MSA funds, and all of it was spent on health research, uncompensated care, medical assistance for workers with disabilities, and tobacco control programs.