Cigarettes and Tobacco News

Jan 14, 2007 -- COLUMBIA - South Carolina's reputation as a longtime tobacco state was built on the backs of farmers whose lifeblood depends on the cash crop that has since fallen out of favor. While the nation's other tobacco states have abandoned that heritage by increasing the tax on each pack of cigarettes, the South Carolina Legislature has held strong against it for the past 30 years.

But pressure mounts against the state's lowest-in-the nation cigarette tax as more than 70 percent of residents say it's one tax they wouldn't mind seeing increase, and lawmakers begin maneuvering for the potential revenue.

Many believe this will be the year a cigarette tax increase will pass, leaving lawmakers at least three proposals waiting on the table when they return on Tuesday.

A group of lawmakers want to use the potential money to fund health insurance for the state's working poor and children while assisting small businesses with providing coverage to employees. Rep. Paul Agnew, D-Due West, pre-filed legislation to increase the tax from 7 cents a pack to 39 cents for those causes.

The South Carolina Tobacco Collaborative has been lobbying for an increase to deter smokers, particularly youths. It wants the tax to be increased by 93 cents, with a significant portion of the recurring revenue devoted to prevention and cessation programs.

Gov. Mark Sanford and other lawmakers are resistant to an increase without a corresponding tax decrease. Sanford proposed increasing the tax by 30 cents per pack and using the projected revenue toward personal and business income tax relief as a way to create healthier economic conditions here.

If the Legislature follows the governor's proposal, the tax would equal the rate in Georgia and become 2 cents higher than in North Carolina. Missouri's 17-cent tax would become the lowest, with New Jersey the highest at $2.58.

By Sanford's calculations, a 37-cent tax per pack would generate an estimated $107 million in new revenue. The tax currently brings in about $30 million each year.

Whatever the proposal, House Ways and Means Committee Chairman Dan Cooper, R-Piedmont, advises caution. Smokers now account for less than 23 percent of the state's population, he said, and that number continues to decrease.

That means potential revenue also will decline, and he said he doesn't want the state to be without a plan to address that issue.

Still, as Agnew and others see it, the state must do something now about health care. The state's growing uninsured population continues to drive up premium costs, deductibles and co-payments for those with insurance. "Do we want quality, affordable health care for our citizens or do we want cheap cigarettes?" said Agnew, who proposed the same legislation last year but it never left the committee level. "The time is right. We need to act."

South Carolina Hospital Association spokeswoman Patti Smoake agreed.

"It's a crisis situation," she said.

Roughly 600,000 state residents do not have health insurance, Smoake said, and other projections put that number as high as 850,000.

Uninsured residents still receive treatment in hospitals - the most expensive form of care - but they have no assistance for preventive care or doctor visits, Smoake said. Those hospital bills are eventually passed on to insured residents.

Since 2000, the cost of a family's insurance coverage has risen 87 percent while workers' paychecks increased by 20 percent, according to the hospital association. Three out of five uninsured adults work, most in low-income jobs or for employers that do not offer coverage, the association reported.

While an increase to the cigarette tax might look like a harmless way to line the state coffers, John Singleton, spokesman for R.J. Reynolds Tobacco Co., urged lawmakers to consider the economic benefits of a low tax.

State retailers, especially those close to the borders, have undoubtedly benefited from having the lowest tax in the nation, he said.

South Carolina tobacco farmers would also feel a pinch if the tax were increased because of decreased demand, Singleton said. An increase also would hit low- to moderate-income families harder because smokers tend to be less affluent, he said.

A deterrent is exactly what Kelly Davis is looking for.

"The greater the tax, the greater the impact all around," said Davis, cigarette tax campaign coordinator for the tobacco collaborative. Increasing the tax puts the cost of cigarettes out of reach for some smokers, especially the youngest ones, she said.

The collaborative employed Public Opinion Strategies to conduct a recent poll that showed that 71 percent of registered state voters would back the collaborative's proposed 93-cent increase.

Senate President Pro Tem Glenn McConnell, R-Charleston, said he would consider increasing the cigarette tax with a corresponding tax cut.

"The cigarette tax should not be passed as a punitive tax," he said. "Just to raise it on smokers, to me, is not good public policy. Good sense and good health should tell you to quit smoking. I am very reticent of government trying to control everyone's behavior."