Oklahoma Cigarette Tax Ruled Unconstitutional

State Supreme Court found that lawmakers failed to follow constitutional requirements for revenue-raising measures and tax increases.

August 14, 2017

OKLAHOMA CITY – The Oklahoma Supreme Court ruled last week that the $1.50 per pack cigarette “assessment fee” passed by the state legislature in May is unconstitutional, reports Reuters. 

The high court ruled on August 10 that lawmakers failed to follow constitutional requirements for revenue-raising measures and tax increases when they passed Senate Bill 845 last session. Following the ruling, Oklahoma Gov. Mary Fallin suggested calling a special session to find a solution that will replace the lost revenue.

Fallin said in a statement that invalidating the fee would cause a $215 million budget shortfall. "These agencies and the people they serve cannot sustain the kind of cuts that will occur if we do not find a solution," she said. "My belief is we will have to come into special session to address this issue."

Petitioners, which included consumers, retailers, tobacco and wholesale distribution companies, argued that the fee was a revenue-raising measure. The court also called the fee a "revenue raising measure" that was passed in violation of the state's legislative process that requires that such measures cannot be passed in the last five days of a session. The measure also did not garner either a required supermajority vote in favor, or a vote by the people to pass, according to Reuters.

The high court’s justices wrote in their ruling: “As a threshold matter, Petitioners present compelling contextual evidence in support of their claim that the Legislature's primary purpose in enacting SB 845 was to raise new revenues. The State Respondents urge us to ignore that evidence, and understandably so; it strongly indicates SB 845's passage was motivated by the Legislature's need to raise revenue so that it could satisfy its constitutional obligation to enact a balanced budget.”

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