Thursday, the state’s tax on cigarettes climbs to 57 cents a pack from its current 7 cents a pack.

Smokers can expect to cough up an additional $5 a carton.

Residents, retailers and health care advocates are split on the whether the increased tax, which will help pay for health care for the state’s poor, cancer research and smoking prevention and cessation programs, is a good thing.

“They should raise it to $10 per pack,” said Richard Lee, 58, as he manned the office at his auto repair shop, Richard’s Automotive, in West Columbia.

Lee points to a wall photo of himself and his brother who had a portion of a lung removed after years of smoking. Lee’s father and another brother died of lung cancer.

“Every bit they raise, it will keep people from smoking,” said Lee, who added he has never taken a puff in his life.

That’s what anti-smoking groups and lawmakers are banking on.

The increase is expected to prevent more than 23,000 S.C. children from becoming smokers and persuade 13,000 adult smokers to quit, according to the S.C. Tobacco Collaborative, an anti-tobacco group that includes the American Cancer Society and the American Lung Association, which have worked to increase the tax for the past decade.

There are gains for nonsmokers, too, they claim.

According to the Centers for Disease Control and Prevention, every S.C. household pays nearly $600 a year to cover tobacco-related health care costs.

“There is a huge direct and indirect tax burden to everyone in South Carolina, whether they smoke or not,” said Louis Eubank, director of the collaborative. “So what you’re talking about is a lessening of that burden. Plus, people will be healthier.”

Not everyone agrees.

Just steps outside of Lee’s office, one of his mechanics, David Davis, offers a different take on the tax increase as he works on a BMW.

“It’s ridiculous,” said Davis. A smoker for the past 20 years, Davis said he smokes 11/2 packs a day, depending on how long his work day stretches.

“Some people are going to stop smoking (because of the tax increase), and, eventually, the state will get less money,” he said. “And that will put some businesses out of business.”

Those same two reasons — the regressive nature of the tax and its effect on cigarette retailers — persuaded Gov. Mark Sanford and some state lawmakers to reject a proposed increase.

But in May a majority of lawmakers, faced with a looming $1 billion budget deficit, overrode the governor’s veto, ending South Carolina’s 33-year reign as the state with the nation’s lowest cigarette tax. Starting Thursday, South Carolina’s cigarette tax will rank 42nd among the 50 states and Washington, D.C. New York leads the nation with its $4.35-a-pack tax.

Since 2002, 47 states, Washington, D.C., and several U.S. territories have increased their cigarette tax to bolster state budgets and wean tobacco-addicted residents.

The federal government has taken up the tobacco tax habit too, increasing the federal tax by 62 cents a pack to $1.01 in April.

The double punch of state and federal cigarette tax increases could threaten the livelihood of some S.C. convenience stores, particularly those in counties that border North Carolina and Georgia, said David Jordan, marketing director of R.L. Jordan Oil Co., which operates 41 Hot Spot convenience stores in South Carolina. Cigarettes make up about 25 percent of the company’s sales.

“There is no other product that generates money and jobs like cigarettes,” Jordan said.

“We don’t know how much business we’ll lose to North Carolina and Georgia, but we know it’s going to happen,” he said, adding both border states will have lower taxes than the Palmetto State starting Thursday.

Jordan said his company anticipated a drop of 5 percent to 7 percent in cigarette sales when the federal tax was increased. The drop turned out to be more than 10 percent.

“Some stores right on the border will have to adjust to the way they do business. They’ll have to live on a lot less (profit) margin,” he said. “Some probably will go out of business.”

The higher price has smokers, including Claude Williams of Columbia, fuming too.

“They’re getting something over on us. Man, this is exactly why I need to quit,” Williams said as he recently finished off the last of a lunch-break cigarette.

But as Williams thought about it, he realized he wasn’t that upset.

“Who am I kidding?” he said. “I’ve got to have my Newports.”

Taxing smokers

Federal and state tax hikes on smoking will make the habit more expensive. A by-the-numbers look at the how the increase in cigarette taxes will affect smokers:

$4.09: The cost of a pack of cigarettes in South Carolina before on March 31, 2009

$4.71: The cost of a pack of cigarettes in the state after a 62-cents-a-pack federal tax increase

$5.21: The projected cost of a pack of cigarettes in South Carolina after the state’s cigarette tax is raised by 50 cents a pack on July 1
By GINA SMITH
Heraldonline, Jun. 28, 2010

ALBANY — New Yorkers who like to smoke will have to dig a little deeper to light up next month, after the Legislature passed a bill on Monday that will give the state the highest cigarette taxes in the country.

The new law, part of an emergency budget measure to keep the government running, adds another $1.60 in state taxes to every cigarette pack sold starting on July 1, pushing the average price of a pack to about $9.20.

The average price in New York City, which imposes its own cigarette taxes, will be even higher, nearly $11 a pack.

Those who prefer other tobacco products will also be forced to pay significantly more.

The tax on smokeless tobacco will more than double, to $2 an ounce from 96 cents an ounce, starting on Aug. 1. And the wholesale tax on cigars, dips and other kinds of tobacco will rise to 75 percent from 46 percent .

And in what may be the legislation’s most controversial provisions, starting on Sept. 1, the state will begin collecting — or try to collect — taxes on cigarettes sold on Indian reservations to off-reservation visitors, an issue that led to violent protests during the early 1990s.

One Indian chief has said that trying to collect taxes would be considered an act of war.

Gov. David A. Paterson had proposed a smaller increase of $1 a pack in his executive budget proposal, saying it would forestall deeper cuts to state health care spending. But with the state budget now nearly three months overdue, Mr. Paterson and leaders of the Legislature agreed to insert the revised proposal into a pair of emergency bills to finance a week’s worth of government operations, putting pressure on lawmakers to support or risk a government shutdown.

The taxes will provide $440 million in revenue for health care programs, including subsidies for AIDS drugs, money for tobacco cessation programs and $71.6 million for the state cancer research center in Buffalo.

In the Senate, where Republicans and many rank-and-file Democrats had opposed the tax increase, the bill including the higher taxes passed narrowly along party lines, with all 32 Democrats voting yes and all 29 Republicans present voting no.

As for the other emergency bill, which included only appropriations, one Republican, Roy J. McDonald, joined the Democrats in voting yes.

The two bills also passed with only a few votes to spare in the Assembly, where Republicans assailed their Democratic colleagues.

“You’ve never met a tax you didn’t like,” Assemblyman Jim Hayes, a Republican from the Buffalo area, said to Democrats. “The governor proposed a buck. You hiked it to a buck-sixty!”

But Democrats said that the bill would provide needed revenue and begin closing a legal loophole that let New Yorkers buy cigarettes tax-free on reservations, undercutting other retailers.

“Because of the step we took in the Senate today, New York State will now have the added muscle it needs to collect this vital source of tax revenue in full and on time,” said Jeffrey D. Klein, a Democrat from Westchester County and the Bronx who had pushed separate legislation enabling the collection of cigarette taxes from reservations.

Higher cigarette taxes have been hailed by health advocates who say they will persuade many smokers to give up their habit. But critics, including tobacco retailers, said they would drive more customers to the black market.

It was the 12th emergency bill approved since the state’s fiscal year began on April 1. Mr. Paterson has pledged that if the Legislature fails to reach a budget agreement by next Monday, when the next emergency bill is due, he will insert the remainder of his budget proposal into that legislation.

The Assembly speaker, Sheldon Silver, told reporters that he remained confident that budget negotiations were progressing. “I think they’re going well — maybe a little slower than I anticipated last week, but I think they’re going well,” he said.

Reflecting the secrecy of the negotiations between Mr. Paterson and the Democratic majorities in the Senate and Assembly, Republican senators repeatedly pressed Democrats during a floor debate to explain how they would make up the rest of the gap — roughly $3.65 billion, according to Senate Democrats. They also accused Democrats of negotiating the budget piecemeal to hide the true cost of their budget priorities and lay the groundwork to claim that only new borrowing or higher income taxes could bring the budget into balance.

“I just don’t see how this process is going to result in anything other than taxes and fees and borrowing,” said John A. DeFrancisco, the Senate Finance Committee’s ranking Republican member. “This is not a way to run state government.”

The Senate also appeared poised on Monday night to approve a series of other budget bills introduced by Mr. Paterson last week and approved by the Assembly on Friday. Those bills involve spending for the criminal justice system, general government operations, the Transportation Department and state economic development efforts.

Officials said those bills closed about $1 billion worth of the state’s budget gap of more than $9 billion for this year, achieved through a mix of cuts, new revenue and consolidations.

One of the largest cuts would result in New York City’s losing its entire allotment of direct state aid, about $302 million. The bills would also close two upstate prisons, while the State Police would delay, for the second year in a row, training a new class of recruits.

The bills also include what are known as “sweeps,” where lawmakers in effect take money out of accounts that aren’t technically part of the state’s budget. For example, the legislation will transfer $65 million from the New York Power Authority into the state’s general fund.

By NICHOLAS CONFESSORE
Nytimes: June 21, 2010

NEW YORK — The next terror attack on America could be a self-inflicted wound – specifically a cigarette burn.

Politicians expand tobacco taxes to discourage smoking and feed their own nicotine-like addiction to public spending. Like so many others, this government action smolders with unintended consequences. Tobacco taxes create a perfect arbitrage opportunity that radical Muslims exploit to collect money for terrorist groups that murder Americans and our allies. Tobacco taxes should be cut, or at least frozen, before they fuel further Islamic-extremist violence.

Consider the first attack on the Twin Towers, which killed six and injured 1,040. As Patrick Fleenor recalled in a Cato Institute study, “counterfeit cigarette tax stamps were found in an apartment used by members of the Egyptian Islamic Jihad cell that carried out the 1993 bombing of the World Trade Center.”

Smugglers buy cigarettes in low-tax states, disguise them with bogus tax stamps, sell them in corresponding high-tax locales, and pocket the difference. A $2.70 spread separates Virginia’s 30-cent-per-pack cigarette tax and Connecticut’s at $3.00. Driving 1,500 cigarette cartons (10 packs per carton) from Arlington to Hartford yields $40,500 per trip.

This incentive grows, as tax-hungry politicians raise tobacco levies to finance government spending. President Obama signed a 62-cent-per- pack federal cigarette-tax increase — from 39 cents to $1.01. This violated Obama’s solemn pledge that families earning less than $250,000 “will not see any of your taxes increase one single dime.”

Governor David Paterson (D – New York) wants to boost per-pack taxes from $2.75 to $3.75. Assemblyman Michael DenDekker (D – Queens) proposes a one penny “deposit” on every cigarette, or 20 cents per pack. This is refundable, if smokers drag their cigarette butts back from whence they came. If Paterson and DenDekker prevail, add Gotham’s $1.50-per-pack tax and Uncle Sam’s take. Manhattan smokers could pay $6.46 per pack in taxes alone!

Terrorists move cigarettes because they are light, portable, otherwise legal, and produce cash. “Law enforcement officials in New York State estimate that well-organized cigarette smuggling networks generate between $200,000 – $300,000 per week,” a 2008 House Homeland Security Committee Republican staff report concluded. “A large percentage of the money is believed to be sent back to the Middle East, where it directly or indirectly finances groups such as Hezbollah, Hamas, and al-Qaeda.”

• The notorious “Lackawanna Six” Islamic-terror cell reportedly traveled in 2001 from Buffalo to al-Qaeda’s al Farooq training camp in Afghanistan. They scored $14,000 in travel money from Aref Ahmed, a former gas-station operator who was among five defendants convicted in 2004 for cigarette trafficking and money laundering.

• Mohamad Hammoud was convicted in June 2002 on federal charges of materially supporting terrorism. His brother, Chawki, was convicted on related charges, and eight others pled guilty in this case. These conspirators bought cigarettes in North Carolina, which then had a 5-cent-per-pack tax, affixed phony tax stamps, and then sold them in 75-cent Michigan. Over four years, this 70-cent tax spread yielded a $1.5 million profit, part of which this gang forwarded to Hezbollah, along with laptops, night-vision goggles, stun guns, blasting equipment, and more.

• Last May 5 and 6, New York State Department of Taxation and Finance agents arrested Khader Awawdeh, Fahmi Hassan, Hakim Al-Saydi, and Dhafer Ghaleb in the Bronx. Collectively, officials say, they possessed 1,924 illicit cigarette cartons and 36,832 counterfeit tax stamps.

• Hazam Ali Ahmed pled guilty on May 20 to 16 federal firearms, conspiracy, cigarette-smuggling, and money-laundering charges. In one scam, Ahmed hustled some 20,000 cigarette cartons and harnessed the $1.38 margin between Tennessee’s 62-cent-per-pack tax and Michigan’s current $2.00 tax. His Knoxville-to-Detroit operation reportedly cost Tennessee and Michigan some $500,000 in tax revenue. An FBI Joint Terrorism Task Force wiretap caught Ahmed recruiting for al-Qaeda and discussing blowing up a shopping center.

Despite cigarette taxes’ clear and present danger, elected officials simply want more spending money. Many echo former Michigan State Senator Joel Gougeon, who once told WNEM TV: “I acknowledge that we’re making that law enforcement issue more difficult, but offsetting that is our need in the budget.”

As an asthmatic who hates the piercing stench of tobacco smoke, I find myself in rare agreement with those whose product makes me sick. Nonetheless, the tobacco industry’s convincing case for cutting or freezing cigarette taxes is a matter of life and death. Tobacco-tax-hiking politicians unwittingly have created a potentially lethal situation in which lighting a cigarette is like igniting the fuse on a bomb.

By Deroy Murdock
Humanevents, June 7, 2010

BOSTON – Smoking is one of the most dangerous and addictive things you can do, and stopping is one of toughest. That’s why getting smokers to quit, and keeping kids from ever starting, is crucial. It is important not only for them, but for everybody who pays higher health costs to care for people with smoking related illnesses.

Despite that, money for anti-smoking programs has gone down in Massachusetts, while state taxes on cigarettes bring in hundreds of millions of dollars.

Cyndy from Mansfield Declared her Curiosity:

“I’m curious where the tax money on cigarettes goes?”

Mary from Centerville asked:

“How much is being used for anti-smoking programs?”

The answer is – not much.

HOW MUCH MONEY?

Massachusetts has one of the highest cigarette taxes in the country – $2.51 on every pack. Last year that meant $562 million in state revenue. The big tobacco settlement brought in another $315 million. However, out of the nearly $900 million the state took in from cigarette taxes and settlement funds, lawmakers dedicated only $4.5 million to anti-smoking programs this year.

“Right now the program is funded at less than 1% of what the state brings in in tobacco revenue,” said Russet Morrow Breslau, the head of Tobacco Free Mass, a consortium of health groups.

WHERE THE MONEY GOES

Almost all of that revenue goes into the state’s general fund. Not a penny is earmarked for anti-smoking, so the state’s Tobacco Cessation and Prevention Program is funded at whatever level lawmakers decide.

The last time state cigarette taxes increased was two years ago. The tax went up by a dollar a pack. While that money did not go directly to anti-smoking efforts, it is earmarked to help pay for the state’s health insurance program.

“If you’re going to increase prices on cigarettes and tobacco products you need to use that money to help people quit smoking,” said Breslau.

A number of years ago the state did just that. For example, in 2000 Massachusetts spent $54 million on anti-smoking programs. Back then the state was a national model. But tough financial times caused the legislature to use that money for other needs.

“You can’t balance the budget on the backs of smokers,” Breslau said.

FLUCTUATING FUNDING

Funding for the state’s anti-tobacco program fluctuates. It was down to about $2 million a few years ago, and then increased bit-by-bit until it went up to nearly $13 million last year. But the recession and lowered income tax collections caused the legislature to cut $8 million to this year’s $4.5 million level.

“We are doing everything we can with our limited resources to provide them the help they need,” says Lois Keithly, PhD, the head of the state’s Tobacco Cessation and Prevention Program.

FUNDING TO REBOUND?

She points out that the state’s smoking rate has come down and is hopeful that by using their reduced resources wisely they can keep the rate from going the other way. Keithly also said she hopes that funding will increase along with an improved economy.

“We’re hopeful that when the funds become more available that we will be first in line to get additional funds,” she said. “I’m not sure there’s a better investment.”

That’s a feeling shared by Breslau.

“Our hope is that incrementally we increase funding to the program over the next several years. We’re not looking for all the money that comes into the state to go to the tobacco control program.”

Breslau estimates that a $25 million budget would create a strong program, but that’s $20 million more than is being spent today.

By David Wade
May 21, 2010

WEST SENECA – After a ceremony this morning to commemorate a 168-year-old treaty, Seneca Nation officials defended their right to sell tobacco products tax-free despite new federal legislation banning tobacco shipment by mail.

Tribe council chairman Richard E. Nephew acknowledged tobacco is not the greatest commodity to try to build an economy around but said the Treaty of Canandaigua and Buffalo Creek Treaty clearly define the nation’s right to do so.

“We’re not defending tobacco use,” he said after the ceremony at the Burchfield Nature and Art Center. “We’re defending our right to have an economy in our territory. The Canandaigua Treaty promises us fair use enjoyment of our land. We take that to mean govern ourselves, the right to prosper, the right to engage in activities that benefit our people.”

The Buffalo News reported last week that members of the Seneca Nation held a large banner along President Obama’s route during his visit to Buffalo criticizing him for signing the legislation.

Leslie Logan, communications director for the Senecas, recalled traveling to Washington to attend Obama’s inauguration in the hope that Indians everywhere had “a new and different president.” But when Obama signed the anti-tobacco legislation that affected the Senecas more than any other native community, Logan said, she felt “disappointed and dismayed.”

Seneca and state and local officials gather each year at this site along the Buffalo Creek to commemorate the 1842 treaty, which the tribe honored in 2004 by placing a stone and plaque (pictured above) along the creek. This morning’s event included speeches and the Faithkeepers School Singers and Iroquois Legion Drums.

“We come here every year to tell the world that we remember the pacts with state and federal government and to help remember those important guarantees,” said Nephew.

By Joseph Popiolkowski
Buffalonews, May 20, 2010

It took a disastrous economy but South Carolina finally joined the rest of the country in implementing at least a double-digit tax on cigarettes. Lawmakers had to override Gov. Mark Sanford’s veto Thursday to do so. But come July 1, the state tax will be – 57 cents.

That’s still low. Only eight states – including North Carolina, and we’ll get back to that in a moment – have lower state taxes on cigarettes. South Carolina is now tied with Idaho at 57 cents. The new lowest cigarette tax state is Missouri, whose tax stands at 17 cents.

The politics of taxes being what they are, especially cigarette taxes in a tobacco-growing state, change didn’t come easily. It’s taken a decade of wrangling. The key to passage this year might simply have been desperation for any revenue source to help the state keep afloat financially.

But common sense should have won out years ago. The simple fact is raising the cigarette tax does two valuable things: It’s a reliable source of additional revenue, which states need more than ever as the recession drags on, and it reduces smoking – a habit that costs lives and tax dollars.

A Centers for Disease Control report released last month reaffirms those benefits. The report notes that every 10 percent increase in the cigarette tax reduces smoking by 4 percent among adults and 7 percent among young people. Even more reduction comes when states use the tax money for specific tobacco control programs. Not many states are doing so, according to this report.

Money raised through state tobacco taxes in the last fiscal year was more than $17 billion. And based on its studies of past performance, the CDC estimates that if every state were to raise its cigarette tax by $1, “even accounting for the resulting decrease in consumption, an estimated $9.1 billion in additional revenue would be generated each year in the United States. Additionally, approximately 1 million premature smoking-caused deaths would be prevented, and 2.3 million children would not initiate smoking.”

That brings us back to North Carolina. Last year when the state legislature took up raising the cigarette tax from 35 cents we pushed for at least a 50-cent bump. At one point, Gov. Bev Perdue was poised to ask for a $1 increase but cut that in half as a budget battle ensued. In the end, lawmakers only bumped up the tax by 10 cents, the lowest increase of the 15 states. Most raised taxes by at least 50 cents.

Looking at what South Carolina did, in a much more recalcitrant atmosphere, N.C. lawmakers should be slapping themselves. North Carolina’s dime increase last year could have and should have been more.

There’s probably little appetite to go back to that tax well again so soon. But as lawmakers patched together an austere budget for the coming fiscal year, they should acknowledge this missed opportunity to get more from the cigarette tax. Things will likely get worse next year as the state faces the end of federal bailout dollars.

Several Republican S.C. lawmakers said that looming revenue cliff is what made them see the light about the cigarette tax.

“We’re about to fall into the ditch,” said GOP Sen. Larry Martin of Pickens.

Still, some in South Carolina are predicting a vote for this tax will hurt supporters come election time. But just as we said last year when N.C. lawmakers voted for an increase, not all tax hikes are the same. This one is an additional source of revenue in difficult times, and reduces smoking, which can help save lives.

Missouri may soon become the state with the lowest tax in the country….at least on cigarettes. It won’t because of what Missouri has done, but rather, what it hasn’t.

If South Carolina passes its tax hikes on cigarette packs, Missouri, by default, will become the state with the lowest taxes on cigarettes in the country at 17 cents per pack. That’s $1.26 less than the state average.

The rank comes at a time when high numbers of Missourians are lighting up.

Retired Major General Jon Hall has tried to quit smoking twice, both unsuccessfully.

“I started smoking when I was about 12…and the only reason I did that is that my older brother told me that if I was going to hang around them, I had to smoke.”

His older brother died of lung cancer.

“He was younger than I am, and I’m still going fairly strong.”

Hall is part of a statistic ranking Missouri fourth in the nation for percentage of adult smokers. With one in four Missourians lighting-up.

House Democrat Jamilah Nasheed is sponsoring a bill to raise taxes on cigarettes to 33 cents. She wants the $90 million for the budget.

The bill’s hearing is not yet on the calendar, but to get the smoking rate down, cardiologist Dr. Arun Kumar has another idea.

“The effect of smoking on our overall health care costs is immense, and if we focus our energies on preventing people from smoking in the beginning we’ll be far better off,” Kumar said.

The Center for Disease Control says Missouri now only uses 1.7 percent of the recommended amount of money to curb smoking.

As for Hall, he’s not swayed.

“I’m taking two drugs right now that are suppose to make me stop and I’m taking them right along with cigarettes.”

Republican state representative Ed Emery said it is not the government’s job to manipulate people’s behavior with taxes. However, he did say he would consider a bill that cuts taxes for those who do not smoke, while hiking taxes for those who do.

COLUMBIA — The Senate tonight stripped down a bill to increase the cigarette tax and earmarked almost all of the money it would raise toward future health care costs as a way to prepare for an expected veto from Gov. Mark Sanford.

The bill would raise the tax by 50 cents to 57 cents a pack and is expected to generate $136.1 million to be used to plug expected shortfalls next year in the state budget.

The bill now returns to the House, which passed it last year.

Most of the money would go toward Medicaid expenses. Additionally, $5 million would go to the Hollings Cancer Center at the Medical University of South Carolina for lung cancer research and another $5 million toward helping people quit smoking and stop them from starting.

The Senate took out provisions that would have set aside $2.7 million for promotion of South Carolina’s agricultural products and $3.5 million toward an infrastructure grant program for the state’s Interstate 95 corridor.

By adding money for I-95 projects and agriculture promotions cost the legislation votes, and put the bill at risk of failing short of the votes needed to override a probable veto by the governor. The Senate had added that spending on March 31 when the body gave the bill key approval.

Senate President Pro Tem Glenn McConnell, R-Charleston, and Sen. Mike Rose, R-Summerville, had said they wouldn’t vote for the bill if it was loaded down with new spending commitments unrelated to health care.

“I am for a 50-cent increase with all the money being spent for health care,” Rose said this morning. “What I am not for is raising a cigarette tax with millions of the money going for expenditures that have nothing to do with health.”

The Senate reached a compromise by annually directing $3 million to go to I-95 infrastructure improvements and $1 million to the Department of Agriculture for marketing South Carolina-grown crops from the state’s tobacco settlement money, when available.

Rep. Chip Limehouse, R-Charleston, said he will lead an effort in the House to approve the cigarette tax increase. Supporters in the House are also preparing for a veto.

South Carolina’s cigarette tax is the lowest in the nation and has not been increased since 1977.

The House also approved a 30-cent increase as part of the state budget. But the bill to increase it by 50-cent is expected to be the proposal to be voted on.
BY YVONNE WENGER, Postandcourier
April 14, 2010

It is nearly axiomatic that a Republican who backs a tax increase is headed for a rough ride. Everyone remembers how President George Herbert Walker Bush, who won the White House in 1988 by making a strong anti-tax pledge to the American electorate, lost the confidence of the voters—and his bid for re-election—when he went back on his word. Nevertheless, the temptation to raise taxes, especially when political advisers come up with a way to spin them as “necessary,” is sometimes too much to resist. Even in the current political environment.

The Obama recession left a lot of economic holes the stimulus package could not fill. This put more than a few governors of both parties in the position of finding ways to at least make them smaller—either by cutting spending or by drumming up new revenues. Some, like New Jersey’s new Republican Gov. Chris Christie, chose to take a hard line on spending and to confront the public employee unions whose contracts have driven the state close to bankruptcy. Others, like Utah Gov. Gary Herbert, chose to make a “deal with the devil,” sacrificing principle in the name of political and economic expediency.

In what some are calling “a late-night, behind-closed-doors deal,” Herbert recently put his signature on legislation that increased the state’s tobacco tax, provoking the ire of the Tea Party movement and putting the governor’s re-election bid in jeopardy.

It’s not that tobacco products are popular in Utah; they’re not. It’s the principle of the thing, as one local Tea Party leader told Salt Lake Tribune columnist Paul Rolly. “This doesn’t mean we are in favor of tobacco products,” the Tea Party leader said. “Most of us are not. But it’s the principle that has made this offensive.”

According to Rolly, the Tea Party movement has been energized over the idea that one small group—smokers—has been targeted for a tax increase to the alleged benefit of everyone else just because the taxable good is, in the current environment, unpopular.

“If the money from this tax went for programs to help people quit smoking or deal with the effects of smoking—that would be one thing. But this money is going into the general fund,” the Tea Party leader, who asked not to be identified by name, told Rolly.

He might also have added that, according to a number of studies going back many years, the tax is counterproductive. There are those who argue that raising taxes on tobacco is a good way to help people quit smoking because it makes cigarettes in particular too expensive. If this is true, and basic economics suggest that it is, then higher taxes mean fewer smokers. And fewer smokers mean state revenues from tobacco taxes go down, not up.

“He and his fellow 912ers see no difference between the tobacco tax and proposals in other states to tax bullets, soft drinks, and junk food. The opposition to all of that fits right in with the ‘give-us-liberty’ Patrick Henry movement that Republicans have so far adopted as their own,” Rolly wrote before predicting electoral trouble on the horizon for Herbert because the Tea Party people are now thinking about throwing their support to Salt Lake County mayor and Democratic gubernatorial candidate Peter Corroon.

“We are taking a closer look at Corroon, because he has a pretty strong record of fiscal conservatism,” the Tea Party leader said, pointing to the 20 percent reduction in Salt Lake County’s budget and Corroon’s opposition to his own party’s tax increase proposals. The group is also impressed that Corroon stood against using taxpayer money to subsidize pro soccer in Sandy, while most Republican politicians supported it. “This doesn’t mean we have decided to turn our backs on Herbert and support Corroon at this point,” the source said. “It just means we think Corroon is worth looking at. We’re not just automatic votes for the Republican.”
By Peter Roff, Thomas Jefferson

Cigarette taxes were increased in 15 states last year, bringing the national average to about $2.35 a pack as lawmakers aimed to discourage smoking and add more than $1 billion to government coffers, a U.S. report found.

The mean increase was 52 cents, raising state taxes to about $1.34 on each pack, according to the study by the U.S. Centers for Disease Control and Prevention. The federal tax was also increased last year to $1.01 from 39 cents a pack.

Smoking rates in the U.S. fell about 15 percent in the last decade, though declines slowed in the last five years, according to the Atlanta-based CDC. Thomas Frieden, the agency’s director, has warned that decades of smoking reductions may be ending unless taxes increase and more money is spent on education.

“Increasing cigarette excise taxes is one of the most effective tobacco control policies,” the report’s authors wrote. “Additional increases in cigarette excise taxes and dedication of all resulting revenues to tobacco control and prevention programs at levels recommended by CDC could result in further reductions in smoking.”

Each $1-a-pack increase brings in about $9.1 billion in annual tax revenue, according to the report. A dollar increase, over time, also prevents about 1 million smoking-related deaths and stops 2.3 million children from becoming smokers, the CDC said.

None of the 15 states that increased taxes last year mandated that the money go to smoking prevention programs, which would help curb tobacco use, the CDC said. The states may have increased their taxes because of budget shortfalls last year, the agency said.

All 50 states have cigarette taxes. About 460 cities, towns and counties also impose taxes, which weren’t included in the $2.35 per-pack tax in today’s report. New York City charges an extra $1.50 a pack, and Chicago-Cook County charges $2.68, according to the CDC.

The Senate passed a bill raising the state’s lowest-in-the-nation 7-cent cigarette tax by 50 cents late Wednesday, but only after nearly eight hours of contentious debate that challenged Senate decorum and left lawmakers questioning each other’s motives.

But few lawmakers expect Gov. Mark Sanford to approve the increase this year, and many said the Senate does not have the 31 votes necessary to override a governor’s veto.

If the measure became law, it could raise $129 million in additional revenue, which would be targeted for a DHEC smoking cessation program and a Medicaid trust fund to offset the effects of disease caused by smoking.

At times it was unclear whether the proposal, which is in stark contrast to a 30-cent cigarette tax hike passed by the House earlier this month, was a bill about generating revenue for health care, or for improving airports and providing infrastructure for counties along the poverty-plagued I-95 corridor.

As the debate played out over hours, Supreme Court Chief Justice Jean Toal sat just outside the Senate chamber, joined by Supreme Court Justice Costa Pleicones.

Toal has told lawmakers S.C. courts are in deep trouble because of severe budget shortfalls, and that courts could be closed and personnel let go unless the Legislature finds money to keep them running.

Sen. Larry Grooms, R-Berkeley, and Sen. Shane Massey, R-Edgefield, tried to insert provisions in the bill to use portions of the cigarette tax to aid the courts.

The Senate refused.

But Grooms pushed and wound up the day offering a series of motions that would have stalled or prevented a vote on the tax hike.

“I think it’s going to come to pass that we missed an opportunity,” said Sen. Mike Rose, R-Berkeley, lamenting the politicking that went on. “Some people wanted to put things on this bill to it – to sabotage it,” he said.

“I don’t feel the people of South Carolina were served well.”

The Senate started out by gutting the House bill that called for the 30-cent cigarette tax raise and substituting the 50-cent raise. That amendment earmarked its revenue for health-related purposes, which historically has been one of the main sticking points in passing a higher tax.

South Carolina, a tobacco-raising state, has not raised its cigarette tax since 1977, and is one of only four states that have not raised the tax since 1999, joining California, Missouri and North Dakota.

The average cigarette tax rate in the nation, however, is $1.34 per pack, and the average cigarette tax in the nation’s six tobacco-producing states is 40.2 cents per pack.

The Legislature approved a 30-cent cigarette tax increase two years ago, but Sanford vetoed the bill and the House sustained the veto.

Things deteriorated rapidly after Sen. John Land, D-Clarendon, got the Senate to approve using $3.5 million from the proposed new cigarette tax revenue to fund infrastructure along I-95.

“If the rest of the state doesn’t help I-95,” Land said, “we will be your wards way into the future.”

Using the funds will require the 17 counties along the interstate to put up a two-to-one match.

Sen. Jake Knotts, R-Lexington, warned lawmakers he could only vote for the tax increase if proceeds went to cover pure health care problems caused by smoking, such as those treated by the Hollings Cancer Center at MUSC.

When Land’s proposal got what even Democrats said was a surprising nod of approval, Knotts asked for money to complete a road linking the Columbia Metropolitan Airport to I-26.

Grooms, clearly irritated by support for that measure, wanted funding for a grants program designed to lure low-cost air carriers into the state.

That proposal already is represented in a Senate bill on the calendar, but Columbia-area lawmakers currently are opposed to that measure because they are investigating whether a secret deal has been struck with an airline that would bring the low-cost carrier to an airport in Greenville, not Columbia or Charleston.

The House sent the Senate a provision in the 2010-2011 state budget raising the cigarette tax by 30 cents this year, and Republican lawmakers have generally opposed using the taxes in any way that would raise Medicaid costs.

Read more: http://www.thestate.com/2010/04/01/1224671/prolonged-debate-ends-with-passage.html#ixzz0jpDeS6V1

SANTA FE, N.M. – Cash-strapped states are hitting smokers hard in the pocketbook, raising cigarette taxes to help plug budget shortfalls.

So far this year, legislators have voted to raise cigarette taxes by $1 per pack in Utah and 75 cents a pack in New Mexico, according to a report in USA Today. At least a half dozen other states are considering increases, including tobacco-growing South Carolina and Georgia. In 2009, 14 states and the District of Columbia raised cigarette taxes.

So much action is unusual: This is only the 10th time since 1950 that so many states have raised cigarette taxes at once, according to the Centers for Disease Control and Prevention.

“The main motivation at the moment for most legislators is revenue,” Pete Fisher of the Campaign for Tobacco-Free Kids, an anti-smoking group, told the newspaper. “The budget situation has certainly increased the number of states considering them.”

The average state cigarette tax is $1.34 per pack. That’s on top of the federal tax, raised last year to $1.01 per pack. Rhode Island has the highest state tax at $3.46 per pack; South Carolina’s is lowest at 7 cents. About 46 million Americans smoke, the report stated.

Increased taxes will push smokers to buy in states where cigarettes are cheaper or turn to smuggled products, Frank Lester, spokesman for cigarette-maker Reynolds American, told the newspaper. Most smokers have low to moderate incomes and one-quarter of them fall below the poverty line, he said, adding, “People are struggling.”

Budget woes trumped cigarette-maker influence this month in New Mexico, said state Rep. Gail Chasey, a Democrat, whose previous tax increase proposals fizzled. Democratic Gov. Bill Richardson on Wednesday signed the new 75-cent tax.

Among other states considering tax increases:

* Washington: State lawmakers in special session are poised to raise the state’s tax by $1, bringing it to more than $3 a pack.
* South Carolina: House lawmakers this month voted to raise the tax by 30 cents per pack; the Senate is considering an increase.
* Georgia: A bill to raise by $1 the state’s current 37-cent tax has the 91 votes it needs to pass if it gets to the House floor, said Rep. Ron Stephens, the Savannah Republican sponsoring the bill. But it’s stuck in committee and could die. “Bringing up any new tax in an election year is death—especially for a Republican,” he said. If it doesn’t pass this year, Stephens says he’s sure it will next year.
* Kansas: Gov. Mark Parkinson, a Democrat, has proposed raising the state’s 79-cent-per-pack cigarette tax by 55 cents. A Senate taxation committee last week voted down a 30-cent increase, but the state’s budget deficit makes some increase likely before the session is over, said Sen. Les Donovan, the committee’s Republican chair.

For every 10% price increase, cigarette consumption drops by 3% to 4% among adults, and double that among youth, said Terry Pechacek, associate director for science at CDC’s Office on Smoking and Health. “It is one of the most reliable and effective strategies,” he told the newspaper.

While an increase in the tobacco tax has caused some to light up with joy, others are fuming.

As of midnight Wednesday, smokers will be paying 2.7 cents more per cigarette due to a 14.75-per-cent increase in the tobacco tax. The tax on a package of cigarettes is going from $4.50 to $5.25.

Taxes on cut/loose tobacco are going up by 21 cents per gram and cigars by 100 per cent of the retail price, subject to the existing minimum and maximum tax amounts per cigar.

In what will likely be the most controversial move, subject to the passing of legislation, First Nations individuals could be seeing a significant decrease in the amount of cigarettes they can purchase tax-free. If the government gets its way, on-reserve, tax-free cigarette purchases will be limited to one carton per customer per week — down from three.

That’s already met with criticism from the Federation of Saskatchewan Indian Nations, which claims the move will cost First Nations businesses millions in lost revenue.

“This is a serious infringement on Treaty Rights without the benefit of meaningful consultation,” FSIN Vice Chief Morley Watson said in a written statement. “The Province has extended its authority beyond its jurisdiction. The Province is unilaterally changing quotas on how much tobacco First Nations people can purchase. This is Indian Agent mentality. The old Indian Agent would tell us how much grain, wood, fence posts and other goods we could produce and provide for our families.”

While Health Minister Don McMorris said he understands First Nations people might be upset by the proposed change, as far as the government’s concerned, it’s strictly about health.

“I’m going to look at what is better for the health of our general population, how to reduce some of the harmful effects of tobacco use, and that is my only goal is to reduce those harmful effects,” he said. “I can understand some of their frustration, but I also understand the costs that it has to the health care system.”

Donna Pasiechnik with the Canadian Cancer Society was thrilled with the government’s direction.

“We recognize that smoking rates are very high among First Nations people,” she said. “We know the importance of price in reducing tobacco use and so no smoker was not affected by these measures today.”

From a business perspective, Colin Craig, Prairie director of the Canadian Taxpayers Federation, also praised the government’s announced intention to reduce the number of tax-free cigarettes sold on First Nations, stating: “If you can level the playing field between activities on reserve and off, I think that’s a step in the right direction.”

McMorris said he’s “very confident” the legislation will pass.

But NDP health critic Judy Junor wasn’t enthusiastic about either the proposed legislation or the increase in tobacco tax. While she acknowledged tax increases do lead to decreased smoking, she claimed the decrease is “marginal.”

“People will just do without something else,” she said. “People who are truly addicted, they’re going to go find another way to get the cigarettes and that will be less food, shelter costs, clothing, school supplies, whatever.”

All in all, the tobacco-related changes would mean $35.7 million more in revenue for government.

Meanwhile, the beverage alcohol price increase means an estimated $18.1 million more for the province’s General Revenue Fund.

Effective April 1, most 750-millilitre bottles of premium spirits will go up by 50 cents; 1,140-ml bottles by 75 cents; and a dozen bottles of beer by 75 cents.

Higher-end wine and spirits will also increase in price by about five per cent, although cheaper wine products (below $20) in the 750-ml size won’t change in price.

The alcohol price increases are the result of changes to the Saskatchewan Liquor and Gaming Authority’s markup structure.
March 25, 2010, The Regina Leader-Post

In Wednesday’s column disparaging Maryland’s life-saving 2007 tobacco tax increase (“Did cigarette tax increase do more harm than good?” March 17), Marc Kilmer neglects to mention that this increase, along with other policies such as Maryland’s smoke free workplace law also encated in 2007, have combined to make Maryland’s smoking rate the fourth lowest in the nation, saving thousands of lives and hundreds of millions of dollars that would have been lost because of tobacco caused illness and death.

Like the tobacco companies and other critics of tobacco tax increases, Mr. Kilmer wrongly asserts that the drop in tobacco sales in Maryland after the tax went up was caused by people buying their tobacco in other states and that the tax did not bring in as much as was expected. In 2008, when tobacco taxes were increased in Maryland, Delaware and the District of Columbia, cigarette sales in those three states dropped by 108 million packs. At the same time, in the three neighboring states that did not raise their cigarette taxes, Virginia, West Virginia and Pennsylvania, cigarette sales went up by only 37 million packs. Therefore, the vast majority of the net drop in cigarette sales in Maryland, Delaware and the District of Columbia, was from people smoking less.

The one dollar tobacco tax increase also brought into Maryland state coffers an additional $144 million in revenue, which was almost precisely what we in the public health community estimated based on an analysis by the Campaign For Tobacco Free Kids. And, this money was used to help fund health care expansion for over 100,000 Maryland parents and children, which brought Maryland from 44th in the nation in health care for adults to 16th.

Plainly, Gov. Martin O’Malley and the Maryland General Assembly can be very proud of the success of the 2007 tobacco tax increase, and we look forward to working with them very soon to raise that tax again in order to keep reducing smoking and continuing to expand health care in Maryland.

Vincent DeMarco, Baltimore

The writer is president of the Maryland Citizens Health Initiative.

TOPEKA, Kansas — Proposals to increase taxes on cigarettes, tobacco and alcohol would hit convenience stores hard, Thomas Palace, executive director of the Petroleum Marketers & Convenience Store Association of Kansas, told The Topeka Capital-Journal. As the Senate Taxation Committee considered hikes to the state’s cigarette and tobacco taxes Wednesday, he joked that he considered wearing a big bull’s-eye to the Capitol.

Faced with a deepening budget shortfall that now exceeds $400 million, lawmakers are trying to find ways to close the gap, said the report. The committee heard testimony on a bill that would raise the tax on cigarettes by 55 cents per pack to the national average of $1.34. It also would increase the tax on tobacco products, such as cigars and chewing tobacco, to 40% from 10%. The increased taxes could bring in an estimated $69.5 million in new tax dollars, according to the report..

Committee Chairman Les Donovan, noted the dire budget problems. “We have to do something on the revenue side,” he told the newspaper. “We don’t know if we can cut enough more spending to get us out of here this year. If we can’t, we’re going to do something to raise some revenue some way to try to get us whole again.”

Supporters of the tax increase said it was necessary to help avoid dire cuts and would lower smoking among youths. Oopponents said a tax increase would devastate their businesses.

“In my 30-plus years of observing and serving in the Kansas Legislature taxes have always been a popular topic,” Doug Mays, a former Topeka lawmaker who spoke on behalf of the Cigar Association of America, told the paper. “But in all that time, I can’t recall such stratospheric numbers being proposed in this bill.”

The tax increase, opponents said, would drive business online and to neighboring Missouri, which boasts the lowest tobacco tax in the nation.

Brenda Ellsworth, operations officer for Pete’s convenience stores, said Kansas c-stores also are disadvantaged by a higher gasoline tax and prohibition on selling strong beer and wine. “Our state has provided wonderful roads for our customers to use while commuting to Missouri,” she told the Capital-Journal.

The legislative spotlight this week will shine brightly on tax increases.

Senate committees this week will tackle tax bills aimed at bringing millions in new revenue to the state in an attempt to close a budget shortfall that exceeds $400 million. And while House committees already have taken up many of the issues — and dismissed at least some — there may be more willingness to consider raising taxes in the Senate.

Senate President Stephen Morris has already said he believes the state will need to come up with $300 million in new revenue before the session is over. No one wants to raise taxes, he said, but lawmakers also don’t have an appetite for further cutting schools or programs that aid Kansans with disabilities — programs that account for the majority of state spending. And yes, he said, he knows lawmakers who are adamant the state can cut its way out of the fiscal hole.

“I don’t see how,” Morris said.

So, the Senate Taxation Committee will launch its second week of talks on controversial tax increases with votes expected Thursday on bills that would raise the cigarette and tobacco tax, the sales tax and taxes on alcohol. There is even a bill that would tax sugary drinks.

Meanwhile, the Senate Ways and Means Committee will consider eliminating some sales tax exemptions for many nonprofits and fundraisers while slapping the state’s sales tax on residential utility bills.

Sen. Les Donovan, chairman of the Senate Taxation Committee and a Republican, lamented tax increases throughout hearings last week. Donovan hails from Wichita, among areas of the state hardest hit by unemployment, and he owns a General Motors dealership that has seen better days.

As convenience store and tobacco shop owners told Donovan’s committee last week that a tax increase could put them out of business and drive customers across state lines or to the Internet, Donovan commiserated.

“I understand the impact of things that are outside your control and how devastating it can be to a business when you have invested — in my case millions and millions of dollars into facilities and infrastructure and people,” said Donovan, who counts himself lucky that he hasn’t laid off any workers.

But, Donovan told the crowd, it is going to be difficult to escape without bringing in new revenue.

“Hopefully, this recession will end someday,” he said.

The current budget troubles are unlike anything seen by even the most tenured of lawmakers. The state is in the midst of its third consecutive year of declining state revenues with numbers expected to continue sinking in 2011. Before the current slide, such declines happened just three times in about 40 years — none consecutively.

For many lawmakers, that is the perfect reason not to raise taxes.

Rep. Scott Schwab, an Olathe Republican, suggests that the state should cut and paste budget figures from 2007 and use them in 2011, which he said would balance the budget.

“Why is there such a deficit?,” he asked. “Because we spent it as fast as we made it. It’s poor business, and it’s poor government.”

Schools and organizations that work with the disabled say they already have absorbed cuts that will have long-term effects.

“The simple fact is that Kansans are suffering due to budget cuts and, if more cuts are imposed, that suffering will increase,” said Mark Desetti, a lobbyist for the Kansas National Education Association.

If lawmakers agree, the question that may begin to be sorted out this week is who picks up the bill. Curt Diebel, president of the cigar shop Diebel’s Sportsmens Gallery, last week worked to make the case that his customers already pay their fair share. He said he has very real concerns about going out of business at his Overland Park shop.

“Putting small businesses out of business to placate bureaucrats and nonprofits is real,” he said. “Put a tax on the stones and those who throw.”

By Barbara Hollingsworth, Cjonline
March 14, 2010

Governor Bill Richardson has plenty of company as he considers raising the state cigarette tax which has become a popular method of revenue enhancement in many other states besides New Mexico.

The state legislature passed a 75 cent per pack increase on the cigarette tax slated to begin on July 1st. Governor Richardson will likely sign the bill which is expected to generate about $33 million a year in revenue for the state’s recession-shrunken bankroll.

New Mexico joins Utah, Kansas, South Carolina, and Georgia that have tobacco tax hikes on their agendas. And during the last year, 16 other states have raised cigarette taxes.

Tony Penate is a smoker who questions the tax’s effectiveness. “The number one cause of preventable deaths in this country is obesity now– not cigarette smoking– so I think I’d like to see a tax on soda before they put another tax on cigarettes.”

Currently, the highest tax imposed on cigarettes is in the state of Rhode Island at $3.46 a pack while South Carolina sets the lowest pack tax at seven cents.

New Mexico’s tax on a pack of cigarettes is 91 cents and would raise to $1.66 a pack under the new legislation.

YES: Don’t subsidize costly habit at the expense of services we need.

By Ron Stephens

I’m a proud Republican and a fiscal conservative. I’m also the lead sponsor on a bill that would raise an estimated $350 million in new state taxes and attract another $1 billion in federal health care funds to Georgia. What’s more, I’m looking forward to running for re-election this year and will campaign on this issue.

If all this sounds confusing and contradictory, let me explain. House Bill 39 would raise the state tax on cigarettes by $1 a pack — from the current 37 cents a pack (fifth-lowest in the nation) to $1.37. For a whole host of reasons, this is an idea whose time has come.

For me, the case for the so-called “buck a pack” increase rests mainly on the need to promote the good health of our citizens (by discouraging smoking) and on tax equity.

Right now Georgia’s 37 cents a pack cigarette tax generates about $237 million a year, but we spend $537 million a year treating smoking-related illnesses in Medicaid patients alone. That means Georgia’s taxpayers are subsidizing the medical costs for the smokers among us to the tune of $300 million a year. Per household, Georgians are contributing $550 a year to cover the smoking-related medical costs for the state’s Medicaid patients. Raising the cigarette tax by a buck a pack would generate at least $350 million and put the burden where it needs to be — on the smokers themselves.

Let me be clear that my purpose is not to demonize smokers. Smoking is an addiction, and most of the smokers I know have tried to quit — many times. Without a doubt, the higher tax will give some enough incentive to do so. I certainly hope so. It would suit me fine if the extra dollar tax caused every smoker in the state to stop tomorrow.

Sadly, history tells us that won’t happen. The last time we raised the tobacco tax was in 2003, when we bumped it from 12 cents a pack to the current 37 cents. In 2004, Georgia’s tobacco tax revenues increased by 142 percent. Cigarette manufacturers and retailers opposing my bill warn that it will simply drive smokers across state lines to lower-tax markets, but there’s not much evidence that happens. In South Carolina, for instance, tobacco tax revenues actually declined after Georgia raised its tax in 2003.

Beyond tax equity and health care issues is the fact, of course, that Georgia is facing unprecedented budget challenges. The General Assembly is struggling now to plug a $1.1 billion hole in the state budget. The “buck a pack” tax increase on cigarettes would attract an estimated $1 billion in new federal health care funds, giving us much-needed flexibility in other areas of the budget.

Without new revenue, we’re facing truly draconian budget choices. Do we really want to lay off state patrol officers, fire prison guards and reduce the number of school days so that we can maintain Georgia’s reputation as one of the cheapest cigarette markets in the nation? Is that more important than, for instance, rebuilding a public health system that is already suffering from more than a 30 percent vacancy rate and is inadequate to handle responsibilities that range from checking diabetes and hypertension to responding to disease epidemics and terrorist attacks?

These are not scare tactics. These are the choices now facing the General Assembly — and the people of Georgia.

The next few weeks will tell the tale. Will Georgia opt for a cigarette tax that finally eliminates what amounts to a $300 million subsidy for the cigarette industry and gives us the wherewithal to get through the current fiscal crisis without further undermining the public services Georgians count on? Or will we choose to preserve the dubious honor of being the source of some of the least expensive cigarettes in the nation?

The choice is all of ours to make together. Your House and Senate members need to know what you think.

State Rep. Ron Stephens (R-Savannah) is a member of the House Ways & Means Committee.

NO: Unreliable revenue source declines over time, hurts retailers.

By John Heavener

With state revenue sinking during this economic downturn, some state legislators think they can dig out of the budget hole by raising “sin taxes,” promising that it will not only improve our health, but also solve our revenue problems.

If only it were that easy.

Cigarette taxes are a quick go-to for politicians looking to fund their spending habits. But when raising cigarette taxes become a knee-jerk reaction to budget shortfalls, we need to look at all the facts.

Should the Legislature unfairly single out cigarettes for higher taxes, all while promising the public not to tax their way out of the budget mess?

Unfortunately, government wants to play a bigger role in our personal lives every year, making decisions about our finances, hobbies and health habits that used to be up to individuals to decide themselves. If smoking is their target today, what will it be tomorrow?

Tax advocates understand that most legislators have already pledged not to raise taxes and loath to even consider taxing our way out of the state’s spending problem during a time of economic uncertainty for Georgians. So these tax-increase advocates would have legislators single out cigarette smokers and retailers to carry the burden of a tax increase.

They are quick to point to a poll they recently commissioned that claims a majority of voters would actually support a “sin tax” increase. What these cleverly worded poll questions cannot explain away is what legislators hear every day in their districts: They want the state to cut spending and do not support using tax increases to balance the budget.

There is also a strictly practical reason to rethink raising cigarette taxes. Lots of data suggests that it doesn’t work, that higher taxes on tobacco products consistently have been known to fail to produce the higher projected revenues.

Higher taxes on cigarettes increase their retail cost and encourage more people to give them up or to go looking for cheaper cigarettes somewhere else. Either way, the intended revenues don’t add up.

Tying something as important as funding government programs to a tax that is designed to bring in a steadily declining revenue stream doesn’t make sense. It might provide a short-term fix, but one that virtually guarantees us insolvency down the road. We often fall into these fiscal traps, only to face a renewed crisis later.

And the short-term solution is no sure thing either. For example, New Jersey raised its cigarette excise tax by 17.5 cents in 2006. As a result, its tobacco tax revenue dropped by $22 million a year. The governor’s answer? Raise taxes another 12.5 cents a pack.

In many cases, raising tobacco taxes doesn’t make people quit, it just moves them to do their shopping in another state. If we raise the tobacco excise tax, Savannah-area retailers located close by the border can expect to see their revenues plummet — and tobacco sales constitute a hefty portion of the business done by numerous merchants, especially small, neighborhood stores.

Another common reaction to increased cigarette taxes is for smokers to turn to Internet vendors. These scam artists, many operating out of foreign countries, don’t charge taxes at all, nor do they pay them — failing to provide the state with legally required cigarette taxes.

Their business model of online ordering, credit card payment and mail-order delivery also make it possible for kids to buy cigarettes anytime they want. No ID check to worry about; all they have to do is beat their parents to the mailbox.

Unfortunately, as nice as it would be for a simple cigarette tax hike to solve all our problems, it just won’t work. There is still no substitute for fiscal responsibility. Whether they like it or not, lawmakers should bite the bullet and figure out a way to live within their budget, just like the rest of us.

No one, especially Florida lawmakers, should feel sympathy for major tobacco companies because their market share of a poisonous product is shrinking in the state.

For decades, Big Tobacco lied to consumers about the devastating effects of smoking, and it was only in 1994 that Florida sued to recoup billions of dollars in health care costs under the Medicaid Third-Party Liability Act. Under the settlement, companies have to make payments of about 45 cents a pack, in addition to state and federal taxes.

But not all manufacturers operating in Florida have to pay. Major companies, led by Philip Morris USA, are crying foul – now that the market share of South Florida-based Dosal and a few other smaller companies has skyrocketed from 1 percent to 22 percent in Florida.

Though its motives obviously are financial and its target is Dosal, which has 18 percent of the Florida market, Philip Morris is right that all manufacturers who sell cigarettes in Florida should be taxed equally. No company, no matter how small or where it is located, should be allowed to avoid paying its fair share of the public costs made necessary by its hazardous product.
Dosal and its lobbyists fended off a similar attempt to extend the surcharge to the company last year. Lawmakers shouldn’t let the company – whose cigarettes already are much cheaper than name brands – off the hook this time.

Extending the surcharge to Dorsal and the other companies would mean millions of additional dollars to the cash-challenged state; Philip Morris estimates $221 million a year. Considering Florida collected nearly $60 million less than anticipated in settlement fund money last year and that lawmakers are facing a $3 billion budget deficit, the revenue is sorely needed.
Dosal claims it has been dismissed entirely from the suit, which was pushed by then-Gov. Lawton Chiles and former Attorney General Bob Butterworth, and, thus, shouldn’t be subjected to the surcharge. Philip Morris points out Dosal has never been formally cleared of all the state’s liability claims and that the company already makes similar payments to other states.

The state’s lawyers should thoroughly examine the settlement and seek to close any loophole allowing Dosal to escape liability.

In addition, lawmakers need to recognize that conditions have changed since the settlement was reached in 1997. Dosal is no longer a little company with a minute share of the market.

This is not, as Dosal wants lawmakers to believe, a battle between David and Goliath. This is about applying a surcharge to a sizeable company that manufactures a dangerous product. Forty-eight other states have come to the same sensible conclusion. Florida shouldn’t take the opposite stance.

Time is of the essence. Smokers can even purchase cigarettes online without any taxes being charged, the industry reports, depriving Florida of lawful revenue.

And with the steep increase in state and federal cigarette taxes in Florida over the last year, many North Florida residents are purchasing cigarettes in Alabama and Georgia, where taxes are lower, reducing revenue even more.

Lawmakers shouldn’t forget: Tobacco-related diseases and illnesses kill about 28,600 Floridians a year.

The state’s economic loss from smoking is estimated at $12.5 billion.

And taxpayers have had to pay billions of dollars in health care costs.

As Butterworth has written urging lawmakers to extend the surcharge to Dosal, “It is time to finish the job Florida started in 1997 and make all of Big Tobacco pay.”

SALT LAKE CITY — So, how do you get a fiscally conservative governor to sign a cigarette tax increase in an election year?

Make him an offer he can’t refuse — like more money for programs that he wants, which GOP lawmakers would otherwise cut, including public and higher education.

It’s a strategy that appears to be working, say sponsors of House and Senate bills raising the state’s tobacco tax.

Both Rep. Paul Ray, R-Clearfield, and Sen. Allen Christensen, R-North Ogden, said Monday they believe Gov. Gary Herbert will sign off on a tobacco tax hike, even though Herbert has been talking tough on no new taxes.

Christensen has gone so far as to put together a list of programs the $50 million from his tax increase would keep off the chopping block, ranging from public education to Utah Highway Patrol troopers to the yet-to-be established state dental school.

Although Christensen said Friday his “shopping list” wouldn’t be included in his bill. Instead, the programs that would be saved with the cigarette tax revenue would be determined through the usual budget process.

Many of the items on what he called his “shopping list” are also top priorities of the governor as Herbert negotiates the budget with

Ray doesn’t endorse earmarks, but he understands the effect of identifying where the money should go.

“It plays favorably with the governor,” Ray said. “I think a lot of that is aimed at the governor. He won’t veto it if we take care of the hot spots in the budget.”

Christensen said in a statement that “Gov. Herbert again and again has told us that he has never said he would veto a tobacco tax increase. … He has also said he did not intend to make this particular tax a political issue like some around us are doing.”

But Herbert, who faces conservative state GOP delegates in a May convention, has said he doesn’t want to increase any taxes, including those on cigarettes. Last week, the governor told the Deseret News he has veto pens “greased up and ready to go.”

But how do you get the tax hike past Herbert?

Neither lawmakers nor the governor want to lay off 29 UHP troopers, release 213 prison inmates in August, or make severe cuts to higher education and some human services.

Herbert says take more money out of the state’s Rainy Day Fund to pump into those and other programs. Taking another $50 million from the fund would still leave what he calls a respectable $200 million balance.

But conservatives don’t want to further increase the state’s “structural deficit” for the budget year that begins July 1 and beyond.

“That ensures a general tax hike,” said House Majority Leader Kevin Garn, R-Layton, in 2012 or 2013 if Utah’s economy doesn’t bounce back quickly.

So, to get Herbert’s signature on a tobacco tax bill, legislators could — on a priority basis — put those revenues into programs the governor really wants funded.

If he vetoes the bill, then those programs aren’t funded.

Of course, before the governor can decide what to do about a tax increase, lawmakers need to pass one. Ray says between GOP and Democratic representatives he has around 45 “yes” votes (38 are needed for House passage) on his cigarette tax bill. It would raise the tax on a pack of cigarettes from 69.5 cents to about $1.70.

Christensen has a harder sell to a GOP Senate caucus that’s split on the issue. He said he’ll make another pitch to the caucus Tuesday on his bill to boost the tax on a pack of cigarettes to $2. He can likely count on some Democrat senators’ votes — it takes 15 votes to pass in the 29-member Senate.

Senate President Michael Waddoups, R-Taylorsville, said he’ll support the tobacco tax increase. “I think it’s the proper thing to do,” he said.

Even the tobacco industry itself appears to accept there will be a tax hike. Reportedly, cigarette makers are hoping to limit the size of the increase to just 25 cents or so a pack, rather than stop it altogether.

That is, after all, what Utahns want, according to a recent Deseret News/KSL-TV poll that found 80 percent of the state’s residents want to see the tobacco tax increased.

And nearly 60 percent in the Dan Jones & Associates survey want the state’s budget balanced by a combination of budget cuts and tax hikes to close a $700 million shortfall.

ALBANY — A state tax department policy of not enforcing tax collections on Indian cigarette sales was officially rescinded Tuesday by the Paterson administration. But it will still take approval of a new set of regulations before the tax-free sales are halted.

Gov. David A. Paterson announced a proposed set of rules to break the decades-long dispute over tax-free tobacco sales, which critics say could be costing the state as much as $1 billion a year in revenues. The new plan envisions the tax being collected “upstream” at the wholesale level and not at Indian retail shops.

The proposed rules require cigarette manufacturers to sell cigarettes only to licensed stamping agents that certify they are not supplying tax-free retailers, such as the dozens of businesses on the Seneca Nation reservations, with cigarettes missing an official state tax stamp; they face perjury charges for lying.

The latest move comes as the State Senate Finance Committee is poised to issue subpoenas as early as today to a broad segment of the tobacco industry.

Sen. Carl Kruger, a Brooklyn Democrat who has railed against the lost tobacco excise taxes because of Indian and bootleg sales, is targeting nearly every aspect of the cigarette supply chain with a legal request for information that “could fill a dump truck,” said one government source.

The lawmaker wants to get details on the extent of the state’s untaxed cigarette industry; one state estimate has claimed nearly 40 percent of smokers buy untaxed or low-tax cigarettes “regularly.”

The Paterson administration today also will propose legislation to put in statute its new plan to permit a set number of tax-free cigarette sales to the state’s nine tribes for personal consumption by their members.

It would bypass a law already on the books that calls for coupons to be used by Indians to buy their own tax-free cigarettes. The legislation would lift a current injunction imposed by a state court judge in Buffalo against the state’s enforcement of the coupon-based law.

The release of the proposed rules kicks off a 45-day comment period and a review period that could see enactment in six months, according to an administration official. Government sources said any agreements struck in the coming months to resolve the issue with individual Indian tribes could supersede the new rules.

The proposal comes as Paterson also is trying to push through a $1-per-pack excise tax increase, to $3.75, the nation’s highest. The move would further increase the profitability of bootleg and Indian cigarette sales unless a new collection mechanism is adopted.

The new regulations would result in licensed stamping agents, which basically serve as middlemen between manufacturers and retailers, paying the taxes to Albany. Besides certifying they are making only legal, taxable sales, wholesalers would have to list the source of their cigarettes with the tax department.

Manufacturers would have a legal burden, as well, because they would have to collect the certifications from wholesalers — meaning they could not sell their products to any wholesaler unless that supplier has certified to the tobacco companies that they do not sell any illegal tax-free cigarettes.

The Seneca Nation did not comment on the proposal.

“It seems reasonable to me,” Russell Sciandra, director of the Center for a Tobacco Free New York, said of the proposed rules.

The plan also calls for an “adequate” number of cigarettes to be supplied tax-free to Indian tribes for personal consumption of its members. In the case of the Senecas’ 7,967 members, it would mean a total of 167,000 tax-free packs being supplied to the tribe every quarter — or 21 packs every three months for every man, woman and child enrolled as a Seneca.

In all, the state’s nine tribes—with a total of 31,000 members — would receive 648,000 packs of tax-free cigarettes per quarter. Licensed stamping agents would be in violation of state law if they supply an amount beyond the approved allotment for each tribe.
By Tom Precious
NEWS ALBANY BUREAU

SALT LAKE CITY — Gov. Gary Herbert said Wednesday he’s got a set of pens “greased up and ready to go” to veto a cigarette tax increase and other issues being considered by the 2010 Legislature.

The GOP governor told the Deseret News any tax increase would hurt the state’s economic recovery and said he’s concerned lawmakers are cutting the budget too deeply, particularly in public and higher education.

Republican legislative leaders shrugged off Herbert’s warnings.

“It’s just posturing,” said Senate Majority Leader Scott Jenkins, R-Plain City. “It’s about time, in fact. This is OK. We kind of expect it.”

House Majority Leader Kevin Garn, R-Layton, said there just isn’t enough money to do what the governor wants, especially without tax increases.

“Well, he’s put himself and us in a box if he wants more,” Garn said.

Herbert, though, vowed to “push back” in a number of areas that would be cut by the legislative Republicans’ reductions over his recommended budget for next fiscal year, which starts July 1.

Those areas include cutting 29 UHP troopers as well as trimming an additional $3.5 million from the prison budget, which would mean early release of 213 inmates.

There’s no need for Utahns to worry, Herbert said, about the Department of Corrections releasing inmates early, as called for in the budget endorsed by GOP leaders Tuesday.

“I’m confident that won’t happen,” he said. Still, he said state agencies are going to have to “tighten their belts. It’s going to pinch a little.”

But the governor was very clear that he sees no need to cut public and higher education.

GOP lawmakers would take an additional $60 million from colleges and universities, and are threatening to reduce public education funds.

Herbert said lawmakers should be looking at dipping deeper into the Rainy Day Fund and postponing some road projects to plug the holes in the budget.

They should take another $50 million from the fund, he said, which would still leave the balance at more than $200 million. Plus, he said, there’s a list of some $113 million in road projects that can wait until the state is in better financial shape.

Garn said using more one-time money out of the Rainy Day Fund is not something lawmakers are willing to do. And roads have long been a top priority of Republicans in the Legislature.

The governor insisted his plan will work. “We absolutely can get through this, protecting education, maintaining basic levels of service in government and do it all without raising taxes and having a balanced budget,” he said.

GOP lawmakers are looking more closely at raising the tax on a pack of cigarettes to raise some $24 million, but Herbert said he’d likely stop that.

“I’m very reluctant to use the ‘v-word’ at any time. But certainly that, the veto, certainly is on the table. It’s an option,” Herbert said. “I’ve got a couple of pens already out there, greased up and ready to go.”

Senate Minority Leader Pat Jones, D-Holladay, said the threat of a veto from the governor “will throw cold water” on the tobacco tax increase despite support from the public.

Herbert also said he would consider vetoing SB109, a bill that would give the governor the power to appoint the chief justice of the Utah Supreme Court.

“It has the perception that somehow we will interject politics into the selection of the chief justice,” the governor said in an interview. “I just think there’s no reason.”

Jenkins, the sponsor of that bill, already has said he won’t pursue it. Herbert chuckled when asked if he put a stop to the legislation.

“You want me to tell you all my secrets? I think they knew I was not too inclined to support that bill,” the governor said.
Jenkins, though, said Herbert never talked to him about the bill. “I was going to hold it anyway,” the Senate majority leader said. “He’s a big powerful guy, and I don’t want to get in trouble with him.”

The governor also said he’ll make a decision by Friday whether to veto yet another bill, SB11. The bill, sponsored by Sen. Margaret Dayton, R-Orem, says Utah alone will decide regulations on guns produced and used solely in the state.

Herbert said it’s not a gun bill but an interstate commerce issue that may be unconstitutional and could cost the state plenty to defend.

“I’m getting mixed messages as far as the cost, whether it could be done pro-bono, whether the attorney general could absorb it in his existing budget,” the governor said.

But he met later Wednesday with Attorney General Mark Shurtleff and was planning to talk with other attorneys before deciding what to do. Herbert said he wants “some assurances at least that there’s not going to be some kind of extraordinary fiscal cost to this bill.”

Jenkins said he believed the Senate could override a veto by the governor on SB11. “He’s a little concerned about it? That’s just too bad. We passed it,” he said. “Now he’s got to make his decision.”

Finding the two-thirds majority required for a veto override on a tobacco tax increase would be harder, Jenkins acknowledged. The GOP Senate caucus has yet to support or reject the measure.

Herbert just returned from Washington, D.C., where he was able delay and stop shipments of depleted uranium to Utah and resolve the issue of new national monuments in the state.

“If I could be as productive every time I go to Washington, I need to spend more time there,” he said with a smile. “And if our congressional delegation could be as productive as I was this past week, I think that would be a step in the right direction.”

By Lisa Riley Roche and Bob Bernick Jr.
Deseret News

New Yorkers are used to getting nickel-and-dimed to death from their state government.
In fact, it has become the state’s favored way to create more revenue.

From fishing and hunting fees to taxes on just about anything that moves, governors and Legislatures have favored the small stuff to grab greater amounts of money to pay for ever-expanding state spending over the past 20 years.

Those who smoke know the scheme. They pay among the highest taxes in the nation at $2.75 a pack, and if Gov. Paterson has his way, they’ll pay even more. He’s proposing to raise the state tax on cigarettes again another dollar. Add in the higher federal taxes enacted in the past year and cigarettes now average at least $7 a pack. That’s over $80 a week for a pack-a-day person on one of the most unhealthy things you can do to your body.

Many health advocates support higher tobacco taxes as a way to spur people to quit, figuring some people will decide to give up the habit for financial reasons if the health dangers aren’t compelling enough. But for many others hopelessly hooked on smoking, it just means more money out of their pocket.

Sadly, the state appears to want it both ways. They claim they want people to quit smoking, but don’t mind using tobacco taxes as a source of revenue.

And while Paterson is ready to jack the tax on a pack of smokes by a buck, funds for tobacco-cessation programs in the state are being cut. That’s hypocrisy.

Adding another dollar of taxes onto each pack isn’t going to expand the ranks of former smokers. If you can’t quit when the price is a jaw-dropping $7 or $8, what’s another buck? Maybe that’s what Paterson is betting on as well.

But Paterson’s targets go beyond smokers, a group that doesn’t have a whole lot of friends in Albany. He’s proposing a number of other taxes and fees as well, including a so-called sugar tax on beverage syrups and bottled drinks and powders. On face value, it’s not a bad idea, given alarming hikes in obesity among younger people that health officials blame in part on sugary drinks that pack a caloric punch. But again, is the tax to deter consumption or an easy revenue source?

Maybe it’s time for Albany to play it straight with taxpayers. Whether the state picks your pocket in the convenience store, in your fishing license or out of your paycheck, the effect is the same. If the governor and Legislature don’t have the gumption to cut spending enough to match existing revenues, then raise income taxes.

They’re hoping you won’t recognize that while they haven’t taken any more money out of your pay, they raised your taxes just the same.

WASHINGTON — By increasing cigarette taxes by $1 per pack, states could raise more than $9 billion in new annual revenue to help close severe budget shortfalls, a new report released by a coalition of public health organizations claimed. The group has published a national poll along with the report that claimed 67% of voters support a $1 tobacco tax increase.

The poll also claimed that voters prefer higher tobacco taxes to other options, such as other tax increases or budget cuts, for addressing state budget deficits.

The report detailed the revenue and health benefits to each state of increasing its cigarette tax by $1 per pack. If every state and Washington, D.C., did so, they would raise $9.1 billion in new annual revenue and save $52.8 billion in health care costs, it claimed.

The report, Tobacco Taxes: A Win-Win-Win for Cash-Strapped States, was released by the Campaign for Tobacco-Free Kids, American Cancer Society Cancer Action Network, American Heart Association, American Lung Association and Robert Wood Johnson Foundation.

According to the coalition’s poll:

* By a 67% to 31% margin, voters favored a $1 per pack increase in the state tobacco tax, with 53% saying they “strongly” support the tobacco tax increase. This support crosses political lines, with a majority of Democrats (70%), Republicans (68%) and Independents (64%) favoring the increase.
* Voters preferred raising the state tobacco tax to other options for addressing state budget deficits. While 60% supported increasing the tobacco tax for this purpose, more than 70% opposed every other option presented, including higher state income, gasoline and sales taxes and cuts to education, health care, transportation and law enforcement programs.
* By a margin of 59% to 35%, voters preferred a candidate for state office who supports the tobacco tax over one who opposes it. This preference is expressed by majorities of Democrats, Republicans and Independents.

According to the report, states can achieve even greater financial and health benefits if they also increase tax rates on other tobacco products, such as smokeless tobacco and cigars and dedicate some of their tobacco tax revenues to fund programs to prevent children from smoking and help smokers quit.

The current average state cigarette tax is $1.34 per pack, with rates ranging from a low of seven cents in South Carolina to a high of $3.46 in Rhode Island.

The national survey of 847 registered voters was conducted from January 20-24, 2010, by International Communications Research and has a margin of error of plus or minus 3.4 percentage points.

Meanwhile, in South Carolina, Democratic gubernatorial candidate Jim Rex, the state superintendent of education, has proposed raising the state cigarette tax by $1.27 a pack to the national average of $1.34 and using the more than $200 million raised to prevent a proposed five-day teacher furlough and to pay for health care coverage and anti-smoking programs, reported S.C. Politics Today.

In Utah, State Representative. Paul Ray (R) is sponsoring three bills that, if passed, would raise the tobacco tax and ban some nicotine products in the state.

The Utah House approved an amendment to remove electronic cigarettes from one of the bills, the Associated Press said. The bill originally banned electronic cigarettes, which emit a trace of smokeless nicotine, but smokers at a committee hearing last week said a ban could stymie their efforts to cut back or quit the habit.

One of the bills targets nicotine candies, which Ray said are not currently on the market in Utah. But he said he hopes the bill will give the state a head start in blocking their sale.

Another of the bills would ban the sale of tobacco “paraphernalia” to minors—products such as bongs, but not matches or lighters. The third measure, which Ray has sponsored for the third straight year, would increase the state tobacco tax from 69.5 cents per pack to about $1.70 a pack.

In Illinois, Governor Pat Quinn said he is still in favor of an increase in the state’s cigarette tax, a plan that has been talked about since last year, reported the Illinois Radio Network. The bill, which has already passed in the Senate, would increase taxes on a pack of cigarettes by $1, bringing the state’s take in taxes to $1.98 per pack.

In Oregon, a State Senate committee heard public testimony on a bill that would give local governments authority to tax tobacco and cigarettes, said The Oregonian. The State House narrowly passed a similar bill in the last session, but the Legislature adjourned before the bill reached the Senate floor.

The proposal, Senate Bill 1042, would lift a ban against local governments taxing cigarettes and tobacco.

One figure that has come up has been a tax of 25 cents per pack of cigarettes, which would raise between $7 million and $9 million a year, said the report.

Guam – If you’re a smoker get ready to pay more for your cigarettes.

Governor Felix Camacho officially signed bill 150 or the tobacco tax law into effect this morning. In about 60 days from now cigarettes will be taxed at $15 dollars per 100 sticks. That comes out to about an additional three dollars per pack of cigarettes.

Cigars will be taxed at .40 cents per mini cigar, .44 cents per regular sized cigar, and .50 cents per large cigar. Chewing tobacco will also cost an additional dollar per can.

Vice-Speaker BJ Cruz was the author of this legislation.He says that he knew it would make people upset but it was a piece of legislation that he had to push through when he heard that there is one diagnosis of lung cancer per week on Guam.

“This is a very important piece of legislation because it greatly supports with our attempt to discourage tobacco usage in our community,” said Governor Camacho. “Lt. Governor Cruz and I pledge to continue supporting all efforts that provide for a healthier quality of life for our people.”

“I want to commend Governor Camacho and members of the Legislature for ensuring that this became law,” said Lt. Governor Cruz. “This will help us decrease tobacco usage among our people, but more importantly, it will reduce the number of tobacco-related health issues we would otherwise have to address in the future.”

According to PL 30-80, a significant amount of revenue generated from the tax increase will be deposited into the newly created Guam Cancer Trust Fund to be used by programs that support cancer screenings, treatment, and support services.

Additionally, tax revenues will go to GMH, DPHSS, and DMHSA to support disease prevention programs and address future healthcare demands associated with tobacco use.

Maryland’s recently enacted $1-per-pack cigarette tax increase has been a budgetary and public health success for which Gov. Martin O’Malley and the General Assembly should be proud. In the year after it took effect on Jan. 1, 2008, the cigarette tax increase brought $144 million in additional funds into the state coffers, which have helped to fund Maryland’s recent health care expansion. This expansion brought health care coverage to more than 52,000 Marylanders and brought Maryland from 44th to 16th in the nation in health care coverage for adults.

In addition, during the year after the cigarette tax took effect, there were 74 million fewer packs of cigarettes sold in Maryland, and partly as a result, Maryland now has the fourth-lowest smoking rate in the nation. Some have argued that more people just bought their cigarettes in neighboring states with lower cigarette taxes. Not so.

During 2008, total cigarette sales dropped by 103 million in Maryland, Delaware and the District of Columbia, all of which raised their cigarette taxes that year. At the same time, in the three neighboring states that did not raise their cigarette taxes, Virginia, Pennsylvania and West Virginia, cigarette sales went up by 37 million packs. Therefore, the vast majority of the net drop in cigarette sales in Maryland, Delaware and D.C. was from people smoking less, which saved thousands of lives and hundreds of millions of dollars from tobacco-caused illness and death.

Of course, there is some tobacco smuggling in Maryland, although we have no idea how much. What we do know is how much additional money the state has raised and how much the tax increase has reduced smoking. We are pleased that Comptroller Peter Franchot is doing all he can to stop this illegal activity. He could use more effective tools to reduce cigarette smuggling.

Fortunately, there are relatively simple, cost-effective measures Maryland could implement to prevent and reduce cigarette smuggling and other tobacco tax evasion. California, for example, instituted a new high-tech tax stamp for cigarettes and enjoyed a $100 million increase in its cigarette tax revenues (without any tax increase). But Maryland is still using hard-to-see and easy-to-counterfeit tax stamps based on technology from the 1950s. A high-tech tax stamp would shut the door on the tax-free sale of contraband cigarettes by Baltimore retailers by enabling enforcement officials and others to quickly and definitively identify any contraband cigarettes that are in transit or on retailer shelves.

Maryland could also increase statutory penalties for trafficking in contraband tobacco products; require better record keeping by wholesalers and retailers; set up hot lines for consumers, retailers and others to report illegal cigarette sales; better protect whistle-blowers from retaliation; and allow enforcement agencies to keep some of the penalties and fines they collect from contraband traffickers to support expanded enforcement efforts.

With a high-tech tax stamp and enhanced enforcement, Maryland would become a state that criminal smuggling organizations would avoid entirely. It would simply be easier and more lucrative for smuggling syndicates to sell their contraband cigarettes in states like New Jersey or New York that have even higher tax rates than Maryland and still use old-fashioned tax stamps that are easy to copy.

Plainly, Maryland’s past tobacco tax increases have worked well to save lives and raise money to expand health care. It would be a shame if exaggerated fears about smuggling, such as those raised in a recent column by The Sun’s Jay Hancock, stopped the state from again raising its cigarette tax. Such an increase would bring in desperately needed new revenue that could further expand health care coverage. It would also improve worker health and productivity, save lives, reduce government and business costs, and protect more of our kids from a lifetime of tobacco addiction.
By Vincent DeMarco
February 3, 2010

A bill that would raise cigarette excise taxes in the state by $1 a pack to raise money for education was snuffed last week when a legislative committee voted unanimously against the idea, the Santa Fe New Mexican reported. However, two other bills remain that could raise the state’s cigarette tax.

The House Business and Industry Committee voted to table House Bill 35, sponsored by Democratic Rep. Brian Egolf, which killed it for this session. Egolf said the legislation would have raised $36 million, earmarked for the public schools.

Health advocates, including the American Cancer Society, supported the bill, along with several labor and religious organizations. Supporters saw the bill as a way to prevent further cuts to education and other state programs as the state faces a $600 million budget shortfall, the report stated.

Opposing the bill were tobacco lobbyists and representatives of several business groups, among them Mark Smith, of the Santa Fe Natural Tobacco Co.,

“We pay a good wage,” he told the newspaper. “We’ve been in Santa Fe 27 years.” Smith claimed the cigarette tax increase would cause the loss of hundreds of jobs statewide in the retail industry.

Other opponents noted that the federal tax on cigarettes went up by 62 cents a pack only last year.

However, there are still two Senate bills that would raise cigarette taxes, but if one or both passed the Senate, they likely would have to go through the same committee that voted down this bill, the report stated.

Germany lost out on at least four billion euros worth of cigarette revenue in 2008 as smokers looked for ways to avoid hefty taxes, a study from the Hamburg World Economy Institute (HWWI) has found.

The number of cigarettes smoked in Germany without being taxed in the country has gone up from 16 percent three years ago to 20 percent, it said.

Smokers consumed a total of 23 billion such cigarettes, according to the figures, and the majority were purchased legitimately in other countries. But about seven billion cigarettes were obtained illegally, fueling fears that the trade may be boosting organized crime.

Signs of smuggling

The institute said price differences caused by high taxation allowed organized crime to thrive from trading in contraband. Signs of sophisticated smuggling operations similar to those in the United States, where different states have different tax rates, were now “recognizable” in Europe, according to the institute.

Cigarettes on the shelves in a shopBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: The price of cigarettes has gone up in recent years

The trend comes as smokers try to dodge higher cigarette taxes introduced as a public health measure. Since the latest tax increase in February last year, a packet of cigarettes has cost about 4.50 euros – of which around 3.75 euros is tax.

“The new EU member countries have much lower taxes on cigarettes than we have in Germany and there is always the possibility to smoke smuggled cigarettes. These are, of course, much cheaper,” said HWWI Director Michael Braeuninger.

The majority of illegal cigarettes come from Ukraine (3.2 billion) and Russia (2.4 billion), according to the market research organization Ipsos.

Regional differences

The study showed large variations by region of the average proportion of untaxed cigarettes smoked. In some western parts of Germany it was as low as 10 percent while in some eastern areas half of the cigarettes bought had no German duty paid on them. Most of those cigarettes originated in Poland.

The study was carried out on behalf of Germany’s cigarette industry association, the DZV, which is calling for increased activity against smuggling and counterfeit products.

The change in smoking habits is estimated to have cost the cigarette industry about 1.2 billion euros in 2008.

New York City can’t use a federal racketeering law to accuse discount cigarette retailers of evading hundreds of millions of dollars in taxes on Internet sales, the U.S. Supreme Court ruled.

The nation’s highest court, voting 5-3, today threw out the city’s claims under the U.S. Racketeer Influenced and Corrupt Organizations Act in lawsuits filed in 2003 and 2004.

More than 400 Web sites sell cigarettes over the Internet with many falsely advertising their sales as “tax free,” according to one of the complaints. The city accuses the retailers of not complying with a federal law requiring them to turn over information about their customers to state officials for tax-collection purposes.

Writing the court’s lead opinion, Chief Justice John Roberts said there wasn’t a close enough connection between the alleged failure to supply that information and the city’s inability to collect the taxes. The city contended it could have used the state information to pursue unpaid taxes.

“We have never before stretched the causal chain of a RICO violation so far and we decline to do so today,” Roberts wrote.

The decision reversed a 2008 ruling by a federal appeals court. Two of the defendants, Hemi Group LLC and Kai Gachupin, appealed to the Supreme Court.

Other City Claims

The appeals court decision left open the possibility that the city might be able to press claims against the retailers under New York state law. The Supreme Court didn’t review that part of the ruling.

The city is also invoking a different federal law, known as the Contraband Cigarette Trafficking Act, against other cigarette retailers and wholesalers. That law was amended in 2006 to authorize lawsuits by local governments.

“The city currently has available to it stronger, new legal ammunition that we have used successfully – and will continue to use in the future – in our fight against cigarette bootlegging and tax evasion,” said Leonard Koerner, the chief of the appeals division in the New York City Law Department.

At $4.25, the tax on cigarettes sold in New York City is the highest in the nation. The state collects $2.75 and the city $1.50.

Justices Antonin Scalia, Clarence Thomas and Samuel Alito joined Roberts’s opinion. Justice Ruth Bader Ginsburg agreed with the result, though she accepted only some of the chief justice’s reasoning.

Justices Stephen Breyer, Anthony Kennedy and John Paul Stevens dissented. Justice Sonia Sotomayor didn’t take part in the case.

New York City Mayor Michael Bloomberg is the founder and majority owner of Bloomberg LP, the parent of Bloomberg News.

The case is Hemi Group v. City of New York, 08-969.

By Greg Stohr
January 25, 2010

A body of Non Governmental Organization under the aegis of Africa Tobacco Control Regional Initiative (ATCRI) is making a strong demand on the government of Africa to seek ways of controlling tobacco use in the continent. This cautionary warning is a result of increase in deaths resulting from smoking complications.

No fewer than 5.5 million deaths, resulting from complications from smoking occur in 2009 alone, a World Health Organizations´ statistics reveals. A large chunk of the death was recorded in Africa. This has prompted action from civil society groups concerned with Tobacco Control issues in Africa to try and reverse the trend.

Ethiopian Oncologist, Dr. Bogale Solomon offered a simple but practically hard option. “If everybody agrees to stop smoking at once,” he said, “we can reverse the effect in a day.” However, he was equally cognizant of the fact that such a quick solution was easier said than done.

Bogale stated that tobacco has about 50 chemicals that are known carcinogens. “In more than 90 percent of the time,” he said, “lung cancer is induced by tobacco.” He also recalled that several forms of cancer are induced by tobacco. The oncologist underlined the fact that even if the more people are exposed to tobacco chemicals, the more likely that they will be affected by cancer; there is no as such a safe level of exposure to tobacco.

This growing challenge will put pressure on already overstretched public health burden on Africa, which makes it sensible to implore information provision as a persuasive tactics for smokers to quit and for government to take serious actions “Smoking tobacco is not a matter of personal choice, as it affects not only first hand smokers but also others around them.” Says Bogale.

ATCRI´s acting director Mr. Bode Oluwafemi believes that one way to control the use of tobacco and cut smoking related death is a systematic behavioral change approach. “We need to adopt a strategy for dealing with the Tobacco companies. We need to task African government to place a strong regulatory demand on Tobacco importation or production in their various countries….The Tobacco companies must be made to abide by the provision of the Framework Convention on Tobacco Control, which provides for pictorial warning on the packs of cigarette, such warning signals are deliberately omitted in Africa and it is unacceptable” he said.

This strategy seems to be working out with a few success cases. For instance, two States in Nigeria has placed a ban on public smoking. Few weeks ago America´s State of North Carolina joined the league of states´ that have made smoking illegal in public arenas. This is one step forward; another step is to ensure that these legislations are well implemented.

Another strategy proffered by ATCRI is a provision of reliable information on the situation of Tobacco Control in Africa “If we know what the true situation is in each country, it will give us a guide to new approach and strategies” says Mr. Adeola Akinremi, Africa Regional Coordinator for Framework Convention Alliance, an organization that is ensuring that the contents of the Framework Convention on Tobacco Control is implemented.

At the moment ATCRI with the support of International Development Research Centre, IDRC is gathering useful information that will help develop country-specific intervention for the control of tobacco use African.