Measure targets lowest-in-nation tobacco tax
Wednesday, October 24, 2012
KANSAS CITY (AP) — Missouri voters next month are being asked for the third time in a decade whether they want to continue to have the nation’s lowest tobacco tax.
Proposition B, one of four measures on the Nov. 6 ballot, would increase the state’s 17-cents-a-pack excise tax to 90 cents, making it the 33rd highest in the U.S. In 2002, voters defeated a 55-cent-per-pack increase by about 31,000 votes, and four years later, an 80-cent increase failed by about 61,000 votes.
The national average is $1.46 per pack.
Unlike the two previous elections, Big Tobacco isn’t opposing the increase this year because the measure also removes a loophole that allowed “value” brands, or lesser-known cigarette makers, to recoup money they paid into a state fund set up to offset costs associated with smoking-related illnesses.
Also, Proposition B has the support of a coalition of educators whose institutions stand to receive millions of dollars from the higher tax, which will be earmarked for education and smoking cessation programs, said Missouri Rep. Chris Kelly, a Columbia Democrat who sponsored the measure.
“I think we have a reasonable chance to pass it,” he said. “Part of the reason is that higher-education people are out there working hard for it.”
The state auditor’s office estimates the initiative would generate between $283 million and $423 million annually. Of that, 50 percent would go to public school districts, 30 percent would go to higher education and 20 percent would pay for efforts to keep people from starting to use tobacco or help current users quit.
In addition to the revenue boost, supporters such as the American Cancer Society said raising the price of cigarettes could motivate current smokers to quit and deter young people from ever taking up the habit.
“We’re not going to stop everyone, but most Missourians do want to quit,” said Misty Snodgrass, government relations director for the American Cancer Society. “This is truly about saving lives and keeping kids from ever starting to smoke.”
The mid-October price for a pack of Marlboro Light cigarettes at a QuikTrip in Kansas City, Kan., including the state’s 79 cent tobacco tax, was $6.52. Five miles away at a QuikTrip in Kansas City, Mo., that same pack of smokes, with Missouri’s 17 cent tax, was $5.90.
Prop B opponents, led by the Missouri Petroleum Marketers and Convenience Store Association, said raising the tax so sharply would eliminate the state’s competitive advantage in the tobacco market and result in the loss of tens of millions of dollars in sales tax revenue.
Association director Ron Leone said the 90 cent tax would be higher than in four of the eight states that border Missouri, with the difference ranging from 11 to 30 cents per pack.
While that probably won’t be enough to send Missourians flocking out of the state to buy their cigarettes, he said, all of the people who used to come to Missouri for cheap smokes won’t be spending their money here, either.
“People who come from Kansas, Nebraska, Tennessee and Kentucky to buy cigarettes also do things like fill up their cars,” he said. “If Prop B passes, they stay home. They’re not doing all of these other things.”
Leone said a study by a University of Missouri economics professor concluded that the state would lose more than $67 million in sales tax revenue because of an estimated drop in sales of about 157 million packs. The tobacco tax revenue is earmarked for specific areas, so cities and counties won’t be able to recoup tens of thousands — even millions in the Kansas City and St. Louis areas — of dollars in lost sales tax revenue, he said.
Proposition B also increases taxes on cigars and “roll-your-own” tobacco, but the biggest hit will be to smokers who buy off-brand, or “value” brands, that cost at least a few dollars less than name brands, Leone said.
The measure removes a loophole that allowed smaller tobacco companies that weren’t part of a 1998 legal settlement to be reimbursed each year for the money they pay into a state fund set up to offset costs associated with smoking-related diseases. The result, Leone said, is that the tax on lower-end cigarettes would go up 760 percent, or about 57 cents more per pack on top of the 73-cent excise tax increase.
“A 760 percent tax increase hurts consumers,” he said. “Small businesses are going to go out of business because of Prop B. People are going to be laid off.”
Kelly, who served in the Legislature in the 1980s and ’90s before leaving to become a judge, only to come back to the House four years ago, thinks Leone is just blowing smoke.
“This, according to opponents, is a socialist, job-killing proposal,” he said. “When Woody Guthrie drove over the Oklahoma line, the last socialist left that state. With their ($1.03) tax, they have done just fine. We would also still be lower than Arkansas, Illinois and Iowa. This is mythology.”
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