by T.W. Budig
ECM Capitol reporter
Anti-smoking advocates look to curb the unhealthy habit of cigarette smoking by increasing the state tax on a pack of cigarettes by a $1.50.
While the idea draws mixed comments among legislators, Democratic Gov. Mark Dayton could include a tobacco tax increase in his proposed state budget.
“I do know the governor is seriously considering a tobacco tax,” said Health Department Commissioner Edward Ehlinger.
Currently, Minnesota cigarette smokers pay $1.23 in taxes and fees on a pack of cigarettes.
State taxes or fees on cigarettes — the state’s first tax, enacted in 1947, was three cents a pack — were last raised in 2005 when Republican Gov. Tim Pawlenty’s controversial 75-cent health care impact fee went into effect.
Pawlenty used the impact fee as a means of resolving a state budget dispute.
Some legislators view the state’s current tobacco tax as inadequate.
“It’s embarrassing that we’re below Wisconsin — we should at least be where Wisconsin is. Probably higher,” said House Tax Committee Chairwoman Ann Lenczewski, DFL-Bloomington.
Wisconsin, with its state tax on a pack of cigarettes at $2.52, is well ahead of Minnesota.
Minnesota’s cigarette tax is also below those in Iowa, Michigan, and South Dakota.
In North Dakota, on the other hand, the tax on a pack of smokes is only 44 cents.
Anti-smoking advocates view the cigarette tax as an effective means of trying to control a perceived blight on society.
Pat McKone, a director with the American Lung Association-Minnesota, said raising the price of a pack of cigarettes “absolutely” would reduce smoking.
It’s a “proven strategy,” McKone said.
Smokers are price sensitive, and raising the cost of pack of cigarettes by $1.50 would result in 36,600 state smokers quitting.
American Lung Association is one of about 40 groups, including the Cancer Society, Mayo Clinic, and others, pushing for a $1.50 per pack increase, McKone said.
Ehlinger agrees that increasing the tobacco tax can reduce the number of smokers.
Studies have “consistently” shown that increasing the price on a pack of cigarettes by 10 percent results in about a four percent overall decrease in smoking, Ehlinger said.
The decrease is more marked among young people, as they tend to have less money, he explained.
Smoking carries a societal cost.
The health department estimates smoking-related medical costs in Minnesota approach $3 billion a year.
Cigarette smoking has been linked to cancer, emphysema, low birth weights, premature death.
According to the Department of Revenue, cigarette taxes and fees raised $296 million in 2011.
Changing the tax or fee rate by 25 cents per pack would increase annual revenues by about $50 million.
The notion of increasing the state’s tobacco tax is part of the buzz at the State Capitol.
“People are talking about it,” said House Health and Human Services Finance Committee Chairman Tom Huntley, DFL-Duluth.
“We’re considerably below Wisconsin,” he said.
“As long as the money goes to public health, I would support that (an increase),” he said.
House Health and Human Services Policy Committee Chairwoman Tina Liebling, DFL-Rochester, indicated that anti-smoking groups are actively pushing for a cigarette tax increase.
“I have a lot of priorities this year,” she said.
“I wouldn’t single that one out as one of my highest,” Liebling said.
While Lenczewski is receptive to increasing the tobacco tax, her counterpart in the Senate is less so.
“I have never been a supporter of taxes that make the tax system more regressive. And those quote, unquote ‘sin taxes’ are very regressive,”
said Senate Tax Committee Chairman Rod Skoe, DFL-Clearbrook.
To the extent that smoking in general is a habit of less educated, lower income people, there is a regressive nature to the tobacco tax, Ehlinger conceded.
“(But) tobacco is a regressive disease,” he said.
According to the Centers for Disease Control and Prevention (CDC), the likelihood of a person smoking is influenced by educational attainment.
Nationally, while about 45 percent of adults with GEDs smoke, only about 6 percent of adults with a postgraduate college degrees do.
“It is regressive,” Lenczewski said of tobacco taxes.
“On the other hand, it’s kind of voluntary thing where people decide to smoke,” she said.
Rep. Jenifer Loon, R-Eden Prairie, who carried legislation last session redefining so-called “little cigars” as cigarettes, said House Republicans haven’t spent time this session debating cigarette tax increases.
“It’s nothing we’ve spent any time talking about in our caucus,” she said.
One factor that might influence lawmakers is how additional tobacco revenues would be spent, Loon explained.
Would it be used for health care purposes?
Or would it be used as general fund money? Loon questioned.
“I think those are all factors members would have to weigh,” she said.
Rep. Tom Hackbarth, R-Cedar, doesn’t like the idea of increasing the tobacco tax.
“I think it’s a dumb idea,” he said.
“It always hurts the lower class people when you do that. I think it’s absolutely asinine,” said Hackbarth.
Rep. Bob Barrett, R-Shafer, views the state as facing a spending problem, not a revenue problem.
But Barrett, who has a background in sports and health care, indicated the tobacco tax has a uniqueness.
“Of all the taxes you might want to increase, that might be one — how can I phrase this without supporting it — there would be other reasons why you might want to raise cigarette taxes,” Barrett said.
“I get that. I understand that,” he said.
Minnesota Retailers Association doesn’t support an increase.
“With all taxes you have to look at the competitive landscape,” said Minnesota Retailers Association President Bruce Nustad.
According to U.S. News and World Report, the average cigarette excise tax in the United States has risen from $1.34 per pack in 2009 to $1.46 per pack in 2011.
Excise taxes range from as high of $4.35 per pack in New York to a low of 17 cents per pack in Missouri, the magazine reported last spring.
According to the CDC, about 45 million, or about 19 percent, of all adult Americans smoke cigarettes.
The habit is more common with men than women.
Cigarette smoking is the leading cause of preventable death in the country, accounting for about 443,000 deaths a year, according to the CDC,
In terms of ethnic/racial groups, the American Indian/Alaska Native group, with a 31 percent smoking rate, ranks the highest in terms of smoking.
The smoking rate among Asian is 9 percent.
The heaviest smoking states are Kentucky, West Virginia, Ohio, Oklahoma, Arkansas, Mississippi, and Louisiana.
The smoking rate in Minnesota is lower than the national average.
According to the Minnesota Department of Health, state smoking prevalence has been consistently below the national average since 1999.
Statistics from the 2010 Minnesota Adult Tobacco Survey placed the percentage of adult Minnesotans who smoke at about 16 percent in 2010.
The smoking rate among young adults, 18 to 24 year-olds, is higher — almost 22 percent.
Unlike with other behaviors, half of smokers “desperately want to quit,” McKone said.
When she talks to young smokers they often say they have no intention of smoking for life, she said.
“What they underestimate is the challenge of quitting for life,” said McKone.
Besides the challenge of quitting, tobacco companies relentlessly advertise their products, Ehlinger said.
“Marketing works,” he said.
Huntley believes the odds of a tobacco increase being passed this session will increase if Dayton includes one in his proposed state budget.
The proposed budget is expected out on Tuesday, Jan. 22.
The Minnesota Management and Budget estimates 2013 revenues from two excise taxes and the sales tax on cigarettes at $223 million with the health impact fee garnering about $199 million.
Tim Budig is at [email protected]