EE proposal raised taxes on a pack of cigarettes from 84 cents to $ 1.94
A new nicotine tax and an increase in the tax on cigarettes and other tobacco products in Colorado generated more than $ 34 million in their first five months, according to an analysis of Colorado Sun data.
The EE proposal, which was passed by voters in November, took effect in January, raising taxes on a pack of cigarettes to $ 1.94 from 84 cents. The ballot measure will continue to raise taxes on nicotine, tobacco and cigarettes in Colorado until 2027, when they stabilize.
By comparison, Colorado collected approximately $ 187 million in taxes on cigarettes and tobacco in the 2019-20 fiscal year.
It looks like Colorado won’t hit the $ 87.4 million that non-partisan legislative analysts estimated the EE proposal would raise in its first six months. One reason may be that some consumers stocked up on cigarettes before the new taxes came into effect.
Colorado cigarette sales soared in December, according to data from the Colorado Department of Revenue. The state collected nearly $ 28 million in cigarette taxes under Amendment 35 that month, compared to November and October, when it collected $ 12 million each month.
âIt is possible that this December 2020 revenue increase will lead to a decrease in cigarette earnings in the first few months of 2021,â said Daniel Carr, spokesperson for the revenue department.
The tax collection data for June will not be available until later in July.
The EE proposal was touted as a way to fund preschool niches in Colorado, but money from the voting initiative won’t start going to that cause until fiscal year 2023-24. In the first three fiscal years, revenue from the new and increased taxes will be distributed among the state K-12 education fund, rural schools and housing assistance.
Health advocates see the ballot measure as a way to reduce tobacco and nicotine use, citing studies that show how higher prices can reduce consumption.
The next tax increase under the EE proposal will come in January, when taxes on the manufacturer’s list price for nicotine products will drop from 30% to 35%. Before the ballot measure, Colorado had no tax on nicotine-based products, such as vaping and e-cigarettes.
The EE proposal also enacts a so-called minimum price provision requiring that a pack of cigarettes be sold for no less than $ 7 and a carton for no less than $ 70.
Discount cigarette company Liggett Vector Brands Inc. filed lawsuits in federal and state courts challenging the ballot measure, claiming the minimum price provision violated competition laws. The legal actions are still pending.
The Colorado Sun has obtained emails showing Gov. Jared Polis’s office has been asked to fulfill several conditions that Altria insisted on in return for the tobacco giant, which owns Marlboro, agreeing not to fight legislation that places the EE Proposal on the November 2020 ballot. Altria and Liggett Vector Brands are competitors.
The Colorado Sun is a non-partisan, reader-funded news organization dedicated to covering Colorado issues. For more information, visit coloradosun.com.