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Article published Apr 6, 2003
Senate proposal on cigarettes and food taxes makes good sense

State House leaders and Gov. Mark Sanford should consider throwing their support behind a Senate panel's plan that would raise cigarette taxes while cutting the sales tax on groceries.
The Senate plan would provide a stable funding source for Medicaid, allow the state to pull in more federal money and provide meaningful long-term tax relief to the state's families.
It makes sense for South Carolina to increase its low cigarette tax. The state's Medicaid system is in trouble. State budget cuts have left the program without enough money to meet the health care needs of the state's low-income residents.
Those health care bills have to be paid. If the state doesn't pay through Medicaid, hospitals and other health care providers will simply pass the costs along to other patients and insurers, raising the cost of health care for everyone. One way or another, we will pay.
It makes the most sense to pay through the Medicaid system. For each dollar that state taxpayers put into the system, the federal government matches it on a three-to-one basis.
House leaders have their own method for funding Medicaid. They have put together a proposal to refinance the bonds the state issued on its tobacco lawsuit settlement, but that plan has much more risk and much less stability to it than cigarette tax revenue.
The only reason to oppose increasing the cigarette tax is the anti-tax-increase pledge to which many lawmakers and Sanford have committed.
But the Senate plan would match the cigarette tax increase by lowering the sales tax on groceries by half a percentage point each year. It would be 2008 before the decrease in the food tax matched the increase in the cigarette tax. The plan would help raise money during the current fiscal crisis, but in the long term, South Carolinians would benefit from the tax relief.
The governor would rather cut the state income tax, but the sales tax on groceries has been targeted by Republicans before. It is a regressive tax that hurts poor families most. The state House voted to lower it before, but former Gov. Jim Hodges vetoed the legislation.
Now House leaders and the governor should accept the plan. It makes sense for the state's health care system, for the state's tax system and for the current budget crisis.