Tobacco Tax Increase – What’s Wrong with South Carolina??

May 16, 2008 – Tobacco Tax Increase – What’s Wrong with South Carolina?? South Carolina's (SC) cigarette tax is currently 7 cents, the lowest in the nation. It was last raised 31 years ago. On Tuesday, May 6, 2008 the State Senate gave approval to as 50-cent per pack increase in the state’s cigarette tax. The tax is expected to collect $159 million yearly. According to the S.C. Tobacco Collaborative, which represents health groups raising cigarette tax to 57 cents will prevent 35,500 SC kids who are alive today from becoming smokers. In addition, 18,700 adults will quit or won't start smoking. With such positive health benefits that can result from the increase in the cigarette tax why does the Governor Mark Sanford say that he will veto the Senate's cigarette tax hike. Of the $158 million that is expected to be collected $76.5 million will be used to enlarge and grow Medicaid benefits. Based on current Medicaid growth numbers of eight percent annually, $165.2 million will be needed to provide that same level of benefits 10 years from now. The governor is concerned that the raise in the cigarette tax will result in fewer smokers which could result in a financial shortfall in the future in paying for Medicaid. (As we know some states where the tobacco tax has been increased have actually seen an increase in taxes raised; e.g., Iowa, North Carolina but other states have seen a decrease, e.g., Wisconsin.) Governor Sanford agrees with the idea of raising the cigarette tax but would like the money collected to be used to provide tax relief to South Carolinians. Instead of circumventing the governor's veto the groups wanting passage of the bill should work with the governor to obtain agreement on how the money raised should be spent. One non-negotiable item should be the $5 million needed to pay for efforts to prevent smoking or getting people to quit. References: South Carolina cigarette tax hike gets key approval by Jim Davenport, Forbes.com, 5/6/2008; Gov. Sanford: Cigarette Tax Shouldn't Be Used to Grow Government, sc.gov, 5/8/2007 and SC Tobacco Collaborative - Cigarette Taxes. As of May 15, 2008 - the SC House has delayed debate on a Senate-passed cigarette tax bill. Click on image to enlarge..