Gov. floats $2 tobacco tax increase to fund Medicaid

SALEM, Ore. (AP) — Oregon is exploring an additional $2 tax on cigarettes to help fund the state’s Medicaid program.

Gov. Kate Brown said Wednesday the proposed tax would bring in $346 million every two years. She adds that higher cigarette prices will also encourage smokers to quit the habit.

The plan would also implement a 65% tax on the wholesale price of e-cigarettes as a way to combat teen vaping rates.

Most of the money would fund Oregon’s Medicaid program, which covers health insurance for low-income individuals. Oregon has faced rising Medicaid costs after a drop in federal contributions.

Business groups slammed the idea and said the tax increase will hurt small businesses and only encourage consumers to find tobacco products elsewhere.