States
consider tobacco tax hikes
Health coverage would expand
More than a dozen states are considering
higher tobacco taxes this year, most often to help millions of uninsured
people get health coverage.
Four of the most closely watched proposals call for tax hikes of $1 per
pack or more, an increase attained by only four states in the past.
Wisconsin Gov. Jim Doyle wants a $1.25 increase. Iowa, Maine and
Maryland are considering $1.
The number of tax hike efforts isn't unusual: 21 states boosted tobacco
taxes in 2002 and 17 in 2003 to combat the recession. Many of the new
proposals are noteworthy for their size and link to helping some of the
nation's nearly 47 million uninsured people.
"The amounts you're seeing are larger than we've seen in recent years,"
says Harley Duncan of the Federation of Tax Administrators. Expanding
health insurance, he says, is an "expensive proposition."
Forty-two states, the District of Columbia and Puerto Rico have
increased taxes since 2002 — 10 of them more than once, says the
Campaign for Tobacco-Free Kids. Since 2000, tobacco sales in the USA
have declined 15%, falling more steeply (27%) in the 19 states and the
District of Columbia that tax cigarettes at $1 per pack or more,
industry data show.
Taxes are rising in six states this year, pushing the average price of a
pack of brand-name cigarettes to $4.26, up from $1.95 a decade ago,
according to the economic consulting firm Orzechowski and Walker.
State tobacco taxes range from 7 cents a pack in South Carolina to $2.58
in New Jersey. They raised $14 billion in 2006, up from $7.3 billion a
decade earlier. The 39-cent federal tax, last increased in 2002, raised
$7.5 billion last year.
Industry officials say taxing tobacco to fund statewide initiatives is
discriminatory. "It's asking one small minority group to fund a program
to benefit the entire state," says Steve Kottak of R.J. Reynolds
Tobacco. "Our view is, the smokers have paid enough."
Many states link tobacco taxes to helping people who don't have health
insurance:
- In Wisconsin, Doyle wants to help insure 185,000 of 250,000 uninsured
residents.
- In Oregon, where Gov. Ted Kulongoski has made this a top priority,
Democrats must win five Republican votes in the House next month. The
goal is to cover most of the state's 117,000 uninsured kids.
- In Maryland, state House leaders want to double the state's $1 tobacco
tax and help nearly one-third of the state's 780,000 uninsured.
Iowa Gov. Chet Culver wants a $1 boost to close the gap between $100
million raised from the existing tax and $277 million spent on smokers'
health care.
Tax proposals have been made in at least 19 states this year, although
some are not likely to pass. There are, however, a dozen advanced by
governors.
Governors in the 12 states below have proposed tobacco tax increases
this year ranging from 5 cents to $1.25 per pack. Proposals in at least
seven other states lack governors' support and have less chance of
becoming law. Story, 1A.
State Current tax Proposed increase Where increase would go
Conn. $1.51 $0.49 Education
Del. $0.55 $0.45 Health care/insurance
Ind. $0.55 $0.25 Health care/insurance
Iowa $0.36 $1.00 Health care/insurance
Maine $2.00 $1.00 Balance the budget
Mich. $2.00 $0.05 Human services
N.H. $0.80 $0.28 Health/human services
Ore. $1.18 $0.845 Health care/insurance
Pa. $1.35 $0.10 Health care
S.C. $0.07 $0.30 Income tax reduction
Tenn. $0.20 $0.40 Education
Wis. $0.77 $1.25 Health care/insurance
Sources: Federation of Tax Administrators; Campaign for Tobacco-Free
Kids;and USA TODAY research
