Cigarette tax increase could pass this session

After the sturm und drang of last year’s debate over a raise of one of the nation’s lowest cigarette taxes, it is no surprise that Gov. Mark Sanford and members of the General Assembly have returned this session to make another run at the issue.

It’s agreed by the Governor and a majority of legislators that something needs to be done, with the intention of convincing people to quit smoking (thereby improving the lives of South Carolinians and lowering health care costs) and bringing in additional revenue.

The problem is how to work the tax. Last year, the bill that made it out of the General Assembly would have significantly increased the per pack tax, but allocated the funds to expand the state’s Medicaid program. Doing that led to a veto from the Governor and the effort to sustain the veto in the Legislature.

“If the cigarette tax revenue goes down and Medicaid goes up, we’ll create a bigger hole in our budget,” said House Majority Leader Kenny Bingham in The (Sumter) Item. “I think this will be an issue that is front-and-center this session. Where it’s spent will absolutely determine whether I support it or not.”

Speaker of the House Bobby Harrell, who led the endeavor to sustain the veto in the House in 2008, said that if the same proposal given serious consideration this year, it will suffer the same fate.

“I think that there is a lot of support out there for a raised cigarette tax,” he said. “The problem last year really wasn’t over the tax, it was over how you use the money. And, if we use the money as a tax credit to reduce health insurance premiums, I think that has a pretty good chance of getting through.”

While the Governor has expressed that he doesn’t believe he can eliminate the personal state income tax this year, he has proposed using 30-cent increase in the cigarette tax to institute an optional flat tax of 3.65 percent. Sanford spokesman Joel Sawyer said that while the Governor is ultimately in favor of his own plan, he will sign off on a cigarette tax increase as long as it is revenue neutral.

“If you really want to get after this idea of stimulating the economy, we think that needs to be an income tax cut,” Sawyer said.