NO BUTTS: SENATE CIGARETTE TAX TO INCLUDE ALL TOBACCO

03-30-09tobaccotaxgraph1

By KEITH LAING, THE NEWS SERVICE OF FLORIDA

www.newsserviceflorida.com

THE CAPITAL, TALLAHASSEE, March 30, 2009……….Backers of a proposed tax increase on cigarettes who said this would be the year the plan would get serious consideration were not just blowing smoke: the chairman of the Senate Finance and Tax Committee announced Monday he is backing an expanded version of the fee hike.

Sen. Thad Altman, R-Melbourne, said during a Capitol news conference that the Finance and Tax Committee’s package this year would include SB 1840, which would raise cigarette taxes by $1 a pack.

The bill, sponsored by Sen. Ted Deutch, D-Boca Raton, also now will call for a $1 per ounce surcharge to other tobacco-based products, including cigars, chewing tobacco and snuff.

Altman said the proposal was primarily to address a health care need, despite the fact that backers say it could generate $850 million for a state beleaguered by a deficit that could be as high as $6 billion without federal assistance.

“Protecting Florida’s Health is legislation that would align the cost of Medicaid to the products and behavior that are driving the state’s health costs higher and higher each year,” Altman said, adding that the tax money that’s currently collected doesn’t cover health care costs that arise from smoking.

But Altman did acknowledge the impact the tobacco tax, which he called bipartisan and “a giant step forward for Florida,” could have on the state’s bottom line.

“The purpose of this surcharge…is to help close (the health care gap) and to move past the point we’re currently in where non-smokers are essentially subsidizing – to the tune of close to $600 per year – the cost incurred by the state as a result of those who choose to smoke and use other tobacco products,” Altman said. He said Florida was currently 47th in the nation in revenue collected to offset tobacco-related health care costs.

Deutch partly pinned the state’s cloudy budget forecast on the growing amount of money it is spending on health care.

“It is abundantly clear that our current budget predicament is due partly to the fact that over time, we’ve let what the state spends on tobacco related illness get way out of balance with what we take in from users of tobacco,” Deutch said.

But Deutch too cited the health care benefits of lighting the fire under the tobacco tax, saying that research shows the largest deterrent to youth smoking is pricing them out.

“When you consider that 90 percent of adult smokers tell you that they started smoking in their teens or even younger, this is an enormous prevention opportunity for us,” Deutch said. “Not only will Florida be healthier in the long run, but the drain on our long term Medicaid budget can be mitigated.”

Deutch added that it was more fair to tack the extra fee on all tobacco products than it was to single out cigarette users, as the original proposal did.

“Tobacco products don’t just need to be rolled into cigarettes to be deadly,” he said.

But Philip Morris spokesman David Sutton snuffed out that notion, saying that proposed tobacco tax was not fair, even if it was just applied to cigarettes.

“It’s a highly regressive tax on Florida’s adult tobacco users,” Sutton said. “It’s an unreliable revenue source and can create unintended consequences as people seek to find ways to avoid the excise tax by making their purchases in other places.”

Sutton said that Philip Morris believed a better way to generate revenue from cigarette users than implementing a blanket tax on all tobacco is to get manufactures that do not currently pay into the Lawton Chiles Endowment to contribute. Sutton said a proposal from the tobacco industry to add a 40 cent per pack fee to cigarettes produced by non-settlement manufacturers would level the playing field with companies like Philip Morris that do pay into the trust fund and would generate about $80 million for the state.

Sutton added that with the federal cigarette tax already increased, raising the state fee could be a job-killer Florida can ill-afford with unemployment at record levels. That’s because of the degree to which many small retail outlets rely on cigarette sales.

“It’s a difficult economy out there,” Sutton said. “The federal government just increased its excise tax on cigarettes by 62 cents a pack. In a state like Florida, where you’ve got over 19,000 retailers, there’s potential to lose jobs.”

Sutton said Philip Morris would deliver that message to the Legislature as it considers the tobacco tax, which has yet to be endorsed by the House.

“Philip Morris is opposed to the cigarette excise tax and we are actively communicating our viewpoint to elected officials,” Sutton said.

–END–
03/30/2009

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