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

February 7, 2007 0

John A. Charles, Jr.

  • 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.

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