South Carolina lamwkers to consider cigarette tax hike

As South Carolina lawmakers prepare to consider raising the lowest tobacco tax in the nation, groups pushing for the cigarette tax hike are facing off with tobacco companies.

State senators on Tuesday are set to debate raising the 7-cent per pack tax by 50 cents. The move would put in play an estimated $159 million annually that could be used to expand health care and programs that discourage smoking. The money's especially tempting in a tight budget year that has seen spending plans slashed because of slumping tax collections.

Since the tax last was raised in 1977, workers have had a harder time affording insurance.

"This is a source of revenue that can be used to address those health care needs," said Sen. Thomas Alexander, R-Walhalla, who shepherded the legislation though a Senate committee and plans to push the 50-cent increase.

Opponents of the tax increase say there's little sense in pinning budget demands on smokers.

"We oppose it because we think adult smokers already are heavily taxed and they're already bearing a significant tax burden," said Bill Phelps, a spokesman for Altria Group, the parent company of Philip Morris USA. Phelps said smoking rates are declining about 2 percent a year and most states' expectations of revenue boosts are disappointed.

"We don't think it makes sense to fund government programs with a revenue source that continues to decline," he said.

The proposal would use the first $5 million raised to pay for efforts to prevent smoking or getting people to quit. The rest of the money would be split between an expansion of the state-federal Medicaid program to more families and incentives that encourage businesses to make medical coverage available to employees.

June Deen, a regional spokeswoman for the American Lung Association, said tobacco companies for years have wielded influence that continues to be felt.

"They've been very effective in holding off the will of the people on this issue. We have the lowest cigarette tax in the country. The national average is $1.13. There's testament right there to their influence," Deen said.

Reynolds American Inc. lobbyist Fred Allen said offering tax credits is an attempt to ease concerns for legislators signing no new tax pledges.

"I think the proposers of the tax are laboring mightily to create something that will give legislators that are concerned about their tax pledge some cover," Allen said. "They're just proposing a new tax."

When the bill left the House last year, it called for raising the cigarette tax 30 cents in exchange for cutting sales taxes.

Cigarette companies aren't the only opponents. Convenience stores and gas stations worry about cross-border competition for sales: South Carolina's 57 cents would be higher than Georgia's 37 cents and North Carolina's 35 cents.

South Carolina is not alone in moving to raise the tax this year. In Massachusetts, the House has approved a budget calling for a $1-a-pack increase to raise $175 million for that state's universal health care law. In New York, lawmakers are raising $268 million from a $1.25 increase. In Florida and Kentucky, legislators rejected proposed $1 increases.