Tobacco Taxes Hurt Lottery Revenue!

As you have heard Healthy Kids Plan is back. This time as HB 3358 The bill had its first reading on Friday before Memorial Weekend when few were paying attention.

Here is another reason why a tobacco tax hike is bad for Oregon: Cigarette taxes hurt lottery sales (see chart below) because for many people they are dual purchases. Washington State raised their cigarette excise tax on July 1, 2005. Washington’s big tax hike caused a huge jump in Oregon lottery sales in 05 and 06, as well as WA’s lottery decrease. This means that overtaxtaion of tobacco not only causes a drop in tobacco revenue (as they quit or use online, cross border or mail sales) but now effects lottery revenue as well.

OREGON
Year Sales change (millions $)
1998 $722.3 million
1999 $728.5 million 6.2
2000 $760.2 million 31.7
2001 $794.7 million 34.5
2002 $817.0 million 22.3
2003 $853.5 million 36.5
2004 $893.26 million 39.76
2005 $943.0 million 49.74
2006 $1,095 million +152 !!!!!!!!

WASHINGTON
Year Sales change (millions $)
2000 $452.81 million
2001 $483.90 million 31.09
2002 $438.60 million -45.3
2003 $460.35 million 21.75
2004 $481.44 million 21.09
2005 $458,13 million -23.31 BIG DROP
2006 $477.91 million 19.78

The source used was http://www.lotteryinsider.com.au/lottery.

Losing lottery funds loses might not be as profound if it was not for the fact that when you overtax a product it changes consumers purchasing habits.