Colorado Tobacco Tax Increase for Health-Related Purposes, Initiative 35 (2004)
The Colorado Tobacco Tax Increase for Health-Related Purposes Initiative, also known as Initiative 35, was on the November 2, 2004 ballot in Colorado as an initiated constitutional amendment, where it was approved. The measure raised taxes on tobacco and used the raised fund to pay for educational and preventative medicine health programs.
|Colorado Initiative 35 (2004)|
Election Results via: Colorado Secretary of State
Text of measure
The language appeared on the ballot as:
|“||state taxes shall be increased $175 million annually through additional tobacco taxes imposed for health related purposes, and, in connection therewith, amending the Colorado Constitution to increase statewide taxes on the sale of cigarettes by wholesalers of three and two-tenths cents per cigarette and on the sale, use, consumption, handling, or distribution of other tobacco products by distributors at the rate of twenty percent of the manufacturer's list price; increasing such tobacco taxes effective January 1, 2005; requiring annual appropriations of specified percentages of the additional tobacco tax revenues to expand eligibility for and increase enrollment in the children's basic health plan, to fund comprehensive primary medical care through certain Colorado qualified providers, tobacco education programs, and prevention, early detection, and treatment of cancer and cardiovascular and pulmonary diseases, to compensate the state general fund, the old age pension fund, and local governments for tobacco tax losses resulting from reduced sales of cigarettes and tobacco products; specifying that the appropriations of additional tobacco tax revenues shall be in addition to and not substituted for appropriations for such programs on January 1, 2005; allowing the use of additional tobacco tax revenues for any health related purpose and to serve populations enrolled in the children's basic health plan and the Colorado medical assistance program as of January 1, 2005, upon a declaration of a state fiscal emergency by two-thirds of the members of each house of the general assembly and the governor; prohibiting the repeal or reduction of existing taxes imposed on cigarettes and other tobacco products; excluding all additional tobacco tax revenues from fiscal year spending for purposes of section 20 of article x of the Colorado Constitution; and exempting appropriations of additional tobacco tax revenues from the statutory limitation on general fund appropriations growth or any other existing spending limitation.||”|
The following information was provided in the state Blue Book analysis of Initiative 35:
The proposed amendment to the Colorado Constitution:
increases the tax on a pack of cigarettes from 20 cents to 84 cents, or 320 percent;
doubles the tax on tobacco products other than cigarettes from 20 percent to 40 percent of the price;
specifies that the new tax revenue is to be used for health care services and tobacco education and cessation programs;
requires the legislature to maintain funding levels for existing health-related programs as of January 1, 2005, and to use the new revenue only to expand these programs;
excludes the new tax revenue from state revenue and spending limits and local government revenue limits; and
allows the legislature, by a two-thirds vote, to declare a state fiscal emergency and to use all of the new revenue only for health-related purposes for up to one budget year at a time.
Cigarette taxes are levied by the federal government and all 50 states. The federal tax rate on cigarettes is 39 cents per pack. For 2004, state tax rates range from a high of $2.80 per pack in Rhode Island to a low of 20 cents per pack in Colorado. The national average is 98 cents per pack.
Tobacco products taxes
Taxes on non-cigarette tobacco products are levied on cigars, pipe tobacco, snuff, and chewing tobacco by the federal government and 47 states. The federal government levies its tax according to weight. States tax tobacco products based either on weight or a percentage of price. The tobacco products tax rate in Colorado is 20 percent of the price.
History of tobacco taxes in Colorado
In 1964, the state established a tax on cigarettes of 3 cents per pack. Prior to the state cigarette tax and through 1972, many local governments also taxed cigarettes. In 1973, the state raised the tax on cigarettes to 10 cents per pack and gave local governments the option of receiving a portion of state cigarette taxes or levying their own tax. No local government has levied a tax since that time. In 1986, Colorado's cigarette tax was raised to its current rate of 20 cents per pack, and the tobacco products tax of 20 percent of the price was enacted. The proposal prohibits the legislature from reducing these taxes in the future.
Current tobacco revenues
Colorado collected about $64.8 million from cigarette and tobacco products taxes last year. About one-quarter of this amount is sent to local governments statewide to use as they see fit. The remaining three-quarters is deposited into the state's bank account, along with other state taxes, to pay for state programs. Because Colorado is a participant to the master settlement agreement between the tobacco companies and the various states, the state expects to receive approximately $118 million per year in additional money for the next 20 years.
In the current budget year, the state will spend about $3.0 billion to provide health care to low-income individuals, $4.3 million for programs on the dangers of tobacco use, and $141.2 million for a variety of prevention programs run by the state health department.
The following arguments for were provided in the state Blue Book analysis of Initiative 35:
1) Tobacco use is the leading cause of preventable death in Colorado, killing 4,200 Coloradans each year. Annual health care costs in Colorado directly related to smoking are more than $1.0 billion. Under this proposal, funds will be provided to prevent, detect, and treat cancer and heart and lung disease, ailments that affect many Coloradans. The new taxes will also help low-income children and adults receive health care that they could not otherwise afford. The proposal will provide money to treat individuals who have tobacco-related illnesses and will lower future tobacco-related health care costs by reducing tobacco use throughout the state.
2) Colorado is currently 50th among the states in the level of cigarette taxes. Raising tobacco taxes will deter many youth from becoming addicted to tobacco products. Almost all adult smokers started smoking when they were teenagers. In Colorado, one in every four high school students smokes and over a third use tobacco of some sort. Youth tobacco consumption in Colorado is higher than the national average. Studies have shown that as the price of tobacco products rises, an increasing number of youth will stop, or never start, using tobacco. Funding programs that educate children about the dangers of tobacco use will also discourage youth from using tobacco and will help smokers to quit.
3) This proposal will not decrease revenue to state and local governments. In every state that has raised cigarette taxes, revenue has increased despite reduced cigarette pack sales and use of the internet to purchase cigarettes. This proposal ensures that local governments will receive funds to make up for any revenue loss due to lower tobacco sales because it guarantees that local governments will receive a portion of the new tax moneys.
The following arguments against were provided in the state Blue Book analysis of Initiative 35:
1) The proposal puts a tax increase in the state constitution and increases the size and cost of government. Colorado smokers and tobacco users will pay 320 percent more in state cigarette taxes and 100 percent more in state taxes on other tobacco products to fund state health care programs. Taxes for a one-pack-a-day smoker would increase by $234 each year. Existing constitutional spending requirements have limited the ability of the legislature to react to changes in the state budget and economic conditions. This proposal adds yet another inflexible spending mandate. Further, reductions in sales and consumption due to this proposal will reduce funding to local governments that depend upon current cigarette tax revenues to fund essential government functions like fire and police protection.
2) The tax increase may cause additional hardship to low-income families in Colorado. People living in poverty are 48 percent more likely to smoke than those not living in poverty. The tax takes a much larger bite out of the budgets of low-income individuals than wealthy individuals. There is no guarantee that smokers will benefit from the new health care programs. If this is the case, smokers would be paying much higher taxes, but few would receive additional health care services.
3) The proposal allocates $28 million in badly needed state revenue to tobacco education programs which may not be needed in future years if tobacco use continues to decline. Nationally, demand is decreasing 2 percent per year, but in Colorado demand is falling even more rapidly and will decrease further if consumers turn to other sources, such as the internet, for their purchases. The new tax money may be inadequate over time to maintain some of the proposal's programs while others may have more money than they require. The legislature will not be able to fix these problems because it will have no control over the distribution of this money.>
Citizens For a Healthier Colorado spent a total of $2,079,750 in support of the measure. Protect Our Constitution-Vote No on 35 spent a total of $237,394 in opposition of the measure.
- Colorado 2004 ballot measures
- List of ballot measures by year
- 2004 ballot measures
- History of Initiative & Referendum in Colorado
- Colorado State Legislative Council, Ballot History
- High tobacco taxes won't make the problem go away
- Colorado Secretary of State Elections Division
- Colorado State Legislative Council, "Ballot History," accessed February 25, 2014
- Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
- Blue Book: Analysis of the 2004 Ballot Proposals, accessed January 8, 2014
- Follow the Money, Colorado Amendment 35 Donations
State of Colorado
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