Tobacco fee proves taxing

Whereas good tax policy includes a broad base of taxpayers to pay for public goods, Oklahoma’s new cigarette fee raises money for state-wide health-care services, but only charges those most in need, according to a piece by Courtney Shupert published on the Tax Foundation website.

Shupert was addressing Oklahoma’s Smoking Cessation and Prevention Act of 2017, which, she said, might be going up in smoke.

Although Oklahoma Governor Mary Fallin had signed the act (SB 845) into law on May 31, the constitutionality of the law was being questioned in a pending lawsuit because of its terminology.

‘In recent years, Oklahoma has faced severe budget shortfalls, leading to issues in education, infrastructure, and health-care funding,’ Shupert said. ‘Proposed cigarette tax hikes were introduced last year and again during the most recent legislative session to address these budget concerns, but failed to gain enough bipartisan support. Then, during the last week of the session, SB 845 was enacted to bridge a budget gap.

‘The new law is straightforward; it raises additional revenue from cigarette sales and funds health care. However, the state’s legislative gridlock and budget issues forced the passage of the cigarette charge as a fee, potentially violating Oklahoma’s Constitution.’

The upshot is that local businesses and large tobacco companies have jointly filed a lawsuit against the cigarette fee, claiming it is unconstitutional.

And even some legislators who voted for the bill are said to have found the lawsuit unsurprising, given the hasty passage of the legislation.

This leaves the state in a tight spot with the pending lawsuit, uncertain tax revenues, and additional budget concerns for the future.

Shupert’s piece is at: https://taxfoundation.org/oklahoma-cigarette-fee-fire/.