An Oklahoma History of Cigarette Taxation

Taxation has long been accepted as a primary policy tool for reducing tobacco use and smoking rates. The Tax Burden on Tobacco, originally published by the Tobacco Institute and now by Orzechowski & Walker Consulting, is the primary source researchers use for data on tobacco tax rates in the United States. For work on the demand response to variations in tax rates in tribal jurisdictions, no such “go-to” history of tax rates has been available. Because of its pre-statehood history as the Indian Territory of the United States, a large fraction of total tobacco sales in Oklahoma are tribal sales. Focusing on cigarettes, this paper lays out the history of tobacco taxation in Oklahoma. For nontribal sales, this includes checking, extending, and providing background detail for Orzechowski and Walker’s work. For tribal sales, this includes historical discussion and an extensive tabulation of the tax rates that different Oklahoma-based tribal nations have paid to the state. For the taxation of tobacco products by tribes themselves, details remain sketchy but information that we do have indicates that these rates tend to be low. With a market share for tribal cigarette sales peaking at over 45%, tribal taxation is an important issue in Oklahoma. Despite lower market shares, it is doubtless an important issue for various other of the 50 states, especially in the West. We leave any extension of this work to other tobacco products for future research.