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Archive for Thursday, February 21, 2002

Tax hikes are proposed in 22 states

February 21, 2002

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— Squeezed by the recession, nearly half of the states are looking at raising cigarette taxes to generate revenue and discourage people from smoking, too.

"We've never seen as many states looking at increasing cigarette taxes as a way to make up for fiscal deficits as we're seeing right now," said Janis Borton of the National Conference of State Legislatures.

Twenty-two states are considering proposals by governors or legislators to boost cigarette taxes, according to the group.

Oregon Gov. John Kitzhaber is advocating a 50-cent-a-pack increase, despite protests from the tobacco industry that it would balance the state budget on the backs of smokers.

Kitzhaber spokesman Jon Coney said the governor  a former emergency room physician  views the tax increase as a "two-fer" for Oregon.

"It's a good way to bring in more money in the face of the recession," he said. "There is also a public health benefit. The higher the price of a pack of cigarettes, the fewer the people who will buy them and smoke them, particularly young people."

Kansas Gov. Bill Graves has proposed a 65-cent-per-pack increase.

Already this year, legislators in New York state have approved a 39-cent-a-pack cigarette tax increase. Beginning April 1, New York's cigarette tax will become $1.50 per pack, the highest in the nation.

Also, New York Mayor Michael Bloomberg wants to raise his city's tax on cigarettes from 8 cents per pack to $1.50. Combined with the new 39-cent state cigarette tax increase, the average cost of a pack of smokes in New York city would approach $7 Â the highest anywhere in the country.

The tobacco industry has been waging a state-by-state lobbying effort to try to snuff out the proposed increases.

"We characterize what's going on as tax profiling," said John Singleton, spokesman for R.J. Reynolds Tobacco Co. "You're taking a small percentage of the population and singling them out for an additional tax burden that ultimately benefits the entire state."

Since 1993, the American Medical Assn. has advocated higher taxes on cigarettes as a way for states to raise hundreds of millions of dollars for state budgets while discouraging smoking. The idea picked up momentum after the Sept. 11 terrorist attacks damaged the already weakened economy.

Health officials have attributed the drop in the U.S. adult smoking rate during the 1990s to a combination of high taxes, no-smoking laws and public service campaigns.

States that raise cigarette taxes not only generate more revenue but stand to save money in the long run because health care costs associated with smoking diseases will go down as more people quit, said Dr. Thomas Houston, head of the AMA's Smokeless States program.

Supporters of raising the cigarette tax have tried to sell it as a kind of voluntary tax.

"If you don't want to pay for it, don't smoke," said Minnesota Gov. Jesse Ventura, who wants to raise his state's cigarette tax by 29 cents.

So far, the Republicans who run the Oregon Legislature have rejected Kitzhaber's proposal to raise the cigarette tax, saying they are against any tax increases. Kitzhaber also wants to increase Oregon's beer and wine tax.

"Why not have a latte tax instead?" House Speaker Mark Simmons said. "It's very unfair to target one segment of society for tax increases. It's very demoralizing."

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