Vaping, and its older sibling smoking, might get costlier under Prop EE, though EE would fund schools and other programs.

In Brief: Passing Proposition EE would increase taxes or create new taxes on nicotine products, including cigarettes, chewing tobacco, cigars, and vaping products with liquid nicotine. The new tax revenue would fund expanded preschool in Colorado, plus some level of funding for K-12 education, affordable housing, eviction legal assistance, health care programs, and tobacco education programs. It would also set minimum pricing for cigarettes. Prop EE is a statutory measure and only requires majority voting approval to pass, but tax increases must go to a vote of the people per the Colorado Constitution.

Why or Why Not?: Proposition EE is at its simplest level an attempt to tackle two main topics: minimizing health issues related to nicotine addiction and long-term use, and revenue needs or desires within the state government. The Colorado General Assembly passed House Bill 20-1427 to establish the tax and pricing rates and refer Prop EE to the ballot, and this bill passed basically along party lines, with most Democrats in support and most Republicans opposed.

The chart below illustrates the proposed new tax rates. Readers may wish to note that the proposed tax on “nicotine products” including vaping products would be a new tax.

Proposed tax rates under Prop EE. Source: Colorado Blue Book

Prop EE would also set a minimum after-tax price for cigarettes at $7.00 per pack between 2021-2024, increasing to $7.50 in 2024. Former Daily Camera reporter Sandra Fish recently wrote an extended piece on Prop EE published on the Colorado Public Radio website, and it included a claim that minimum cigarette pricing could economically impact discount cigarette companies.

One of the largest intended sources of Prop EE money would be “expanded preschool,” or at least 10 hours of preschool for every child in their final year before kindergarten. This funding would begin in fiscal year 2023-24, and according to the state fiscal note for HB 20-1427, revenue is estimated at about $164 million in FY 2023-24, increasing to about $230 million for FY 2027-28.

An affordable housing fund would be estimated to receive about $11 million per year for the first three years, and the eviction legal assistance fund is estimated at about a half-million dollars per year for the first three years.

Prop EE Pro:

  • https://forcokids.com/
  • Tobacco and nicotine use are linked with serious health problems, and it’s in society’s best interests to limit use of these addictive products, even if through pricing.
  • Education in Colorado is underfunded, and Prop EE would provide a revenue stream for rural schools in the early going and expanded preschool after the first three years.
  • Coloradans under 18 are vaping or smoking, and one of the best ways to prevent potential long-term addiction is to discourage people from starting in the first place.

Prop EE Con:

  • https://baddealforco.com/
  • The new tax levels are significant increases, which is unfair to adults who use tobacco or nicotine products, plus the new taxes and pricing will impact people of lower income more than people of higher income.
  • The new tax and pricing levels could threaten jobs or economic activity.
  • The government should not try to fund core responsibilities with “sin taxes.”
  • For the classic small-l libertarian argument, the government should stay out of issues of personal behavior and not attempt social engineering through policy.

Richard’s Take: With a strong caveat that I don’t smoke or vape, I’ll say vote YES. Nicotine addiction is real, and addiction can lead to prolonged use of harmful products, which in turn can lead to serious health problems. In many instances, I might not always care about serious health problems if they’re due to personal behaviors, but they can add to the aggregate cost of health care which could necessitate public expense or higher insurance rates, plus second-hand smoke can be dangerous to people who aren’t actually smoking. Despite all this, I can’t deny that some of the new tax and pricing rates will get pretty high if Prop EE passes, and there could be some impact on jobs or economic activity if Prop EE’s minimum pricing and new taxes lead people to quit or reduce their use of nicotine products.