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For Release: April 21, 2003
Contact: Nico Gomez
Oklahoma Health Care Authority
405/522-7484

Leslea Bennett-Webb
Oklahoma State Department of Health
405/271-5601

Cigarette Tax Catches Fire, But Time is Running Out

Support for increasing the state cigarette excise tax continues to gain momentum, according to results released today from a statewide poll commissioned by a group of health care providers. Seven out of ten Oklahomans surveyed indicated they would support increasing the tax on a pack of cigarettes and using the money to help pay health care costs in Oklahoma.

The poll results were released in a news conference at the State Capitol this afternoon hosted by a coalition of health, business and consumer advocates, including the Partners for Health Investment, Oklahoma Alliance on Health or Tobacco, and the Oklahoma Academy for State Goals. These groups said they are joining forces to encourage tribal and state leaders to reach a mutually beneficial agreement on the state’s tobacco tribal compacts before the end of the legislative session.

An agreement between the State of Oklahoma and tribal nations is clearly the first step before legislators can act this year to increase the tobacco excise tax. A $1 increase would reduce cigarette use, especially among Oklahoma’s youth, and serve as an appropriate source of revenue to help meet urgent medical-care needs statewide.

“More representatives and senators are supporting a tobacco tax increase; however, legislative leaders have made it very clear that without an agreement on tobacco tribal compacts, then the tobacco tax increase won’t be seriously considered,” said Patti Davis, Executive Vice President of the Oklahoma Hospital Association and Co-Chair of the Partners for Health Investment.

“New revenue is urgently needed to fund vital public health systems such as Medicaid. With the current budget crisis, many vulnerable Oklahomans – both young and old – will be exposed to loss of health care resources and benefits. Even the state’s American Indian tribal members would be hurt if health care services are cut in state fiscal year 2004,” she said.

According to the Oklahoma Health Care Authority, if Medicaid eligibility was reduced to the federal minimum, more than 5,000 American Indian beneficiaries would lose eligibility. This would result in an annual loss of $7.8 million in state and federal Medicaid payments made on behalf of tribal members, including a $1.7 million loss in direct revenues paid to tribal health facilities.

A $1 increase in the cigarette tax would have multiple benefits,” said Richard Barnes, Chair of the Oklahoma Alliance on Health or Tobacco. “It would reduce the number of adult and youth smokers in Oklahoma by more than 80,000 and would save Oklahomans hundreds of millions of dollars in medical-care costs.”

Barnes continued, “When higher smoking rates and smoking-caused medical costs in the American Indian community are taken into consideration, tribal nations, in particular, could have a tremendous amount to gain in improved health for their members.”

Current tribal tobacco compacts, several of which will soon expire, require that tribal smoke shops in Oklahoma pay 25 percent of the state cigarette tax. According to information provided by the Oklahoma Tax Commission, 36 percent of all cigarettes in Oklahoma are sold through smoke shops either owned or licensed by tribal nations. Mutually beneficial tribal compacts have been successfully crafted and implemented in other states. For example, tribal nations in several states have agreed to remit any new state tobacco taxes in full, but receive a periodic distribution directly from the state for some or all of the tobacco taxes paid.

Julie Knutson, President and CEO of the Oklahoma Academy for State Goals, said more states are raising cigarette excise taxes because of the public health and fiscal benefits.

“Oklahoma’s cigarette tax is 23 cents per pack, ranking Oklahoma 40th in the nation or the 10th lowest. Nationwide, the average tax is now 67 cents. Among non tobacco-producing states, the average tax is 75 cents. Since 1999, 31 states have raised their cigarette tax, including 26 within the last two years,” Knutson said.

“Sixteen states currently have a cigarette tax of $1 or more. Two of our border states, Kansas and New Mexico, approved recent increases to 79 and 91 cents per pack, respectively. Arkansas is currently considering legislation to raise the tax on cigarettes to 84 cents per pack and Texas may soon consider a substantial increase,” she noted.

“The benefits of increasing cigarette taxes are clear and support for quick action is growing every day. However, it will take strong will and a partnership between state and tribal leaders,” Davis said. “We encourage tribal and state leaders to make every effort to reach a mutually beneficial agreement before the end of the legislative session. Thousands of lives truly are in the balance, and the future of Oklahoma’s health depends on taking this action now.”

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