Cigarette tax increase plans flame out in House committee

JIM DAVENPORT

Associated Press

COLUMBIA, S.C. - Plans to raise the state's cigarette tax to help pay for health programs, tax cuts and small business medical insurance died in the House Ways and Means Committee Wednesday.

One bill would have raised South Carolina's nation-lowest 7-cent per pack cigarette tax to 37 cents in the first year, generating nearly $100 million for a new health and prevention fund. That bill also called for the tax rise to 42 cents a pack within two years.

The other bill would have raised the cigarette tax to 39 cents a pack and given the money to Medicaid programs.

"Why do we have to have this tax on the smokers. You're taking it from this small group - this is like profiling, said Rep. Jim Battle, D-Nichols.

But Rep. Rex Rice said smokers have long been a burden on taxpayers. "When the average household in South Carolina is paying $545 in tobacco related illnesses on state and federal dollars, then the people that are smoking the cigarettes need to pay for it," said Rice, R-Easley.

Rice tried to amend the first bill by adding a plan to reduce the state's income taxes, but that failed, and an amendment by Rep. Lewis Vaughn, R-Greer, to use the new cigarette tax money to reduce sales taxes on groceries failed too.

"You're just taking it from the smokers and giving it to the eaters," said Rep. Gary Simrill, R-Rock Hill, who added tax collections from cigarettes could rise and fall, making it unclear how much the grocery tax break would be.

Rep. Harry Ott, D-St. Matthews, said the second bill would allow the state to expand Medicaid programs for children. Those programs now cover children in households living at 150 percent of the poverty level - the minimum federal Medicaid guidelines require. Ott wants to increase the level to 200 percent, which would expand coverage to a family of four with income of $40,000.

The tax increase might not be needed if budget writers in the House had different priorities, Ott said.

"In a year when we had over $700 million new dollars of revenue coming into state coffers, this General Assembly could not find a way to come up with $20 million to provide the most needy children in this state health care coverage," Ott said.

The rest of the money would help set up a program that lets businesses with fewer than 75 employees offer state subsidized health insurance to their workers. The employee would have to pay up to 15 percent, based on their income, and the employer would pay up to 25 percent of the premiums.

"This is something that rewards working South Carolinians who simply cannot afford, or are not provided the opportunity, to have the same type of health care benefits that every one of us sitting at this table have today," Ott said.

Vaughn said it was "unconscionable" to raise taxes for health care when the state had loads of extra cash. "We didn't see the priorities of the health care taking precedence over all the other things we did. ... My constituents don't understand how you got all this money and you need another $100 million," Vaughn said.

The 13-8 votes to kill both bills weren't all that surprising.

The committee has routinely killed plans to increase cigarette taxes that have come up during budget debates in recent years.

And eight of the 13 committee members voting to kill the bills previously have signed Americans for Tax Reform pledges not to increase taxes.

Renee Martin, executive director of the South Carolina Tobacco Collaborative, said in a prepared statement the committee missed an opportunity to reduce smoking among children, a key goal of her group.

"By failing to pass these bills, the House Ways and Means committee has voted to stand with Big Tobacco instead of South Carolinas kids and families," Martin said.