South Carolina - can we expect a tobacco tax increase this year??

April 4, 2009 - At 7 cents, South Carolina's cigarette tax is the lowest in the nation. The Legislature has debated raising the cigarette tax for a decade, but this year's bill drew broader support in the House because it directed the income more toward private-based health insurance rather than toward the state-run health system.

Where the money goes when you buy a pack of cigarettes in South Carolina as of April 1, 2009..

South Carolina's House approved a 50-cent per pack cigarette tax increase Thursday, April 4th with plans to use the extra money to provide health insurance for low-income workers. House members voted by a veto-proof 97-22 to raise the state's tobacco tax from 7 cents to 57 cents on a pack of cigarettes, which is expected to generate $147 million for health care. Of the $147 million in new income, about $139 million would create a fund to cover 75 percent of a health care policy for those making up to about $21,600 a year. The maximum credit would be $3,000. Small businesses with 25 or fewer low-income workers would get a 67 percent credit on insurance premiums for each worker. That would have the same limit.

The vote came after an hour of debate in which House members beat back several proposed amendments, some of which would have lowered the tax increase from 50 cents to 30 cents. State Rep. Chip Limehouse, R-Charleston, said if anything, he would have supported a bigger jump. "I would have liked to see a dollar (per pack increase)," he said, "but just on the heels of the federal hike, it was hard to get that." (Smokers' tax hike ignites passion Some mad enough to quit, some just mad; others take it all in stride by Robert Behre, The Charleston Post and Courier, 4/2/2009.)

Limehouse was referring to the new federal tobacco tax that took effect Wednesday, April 1st increasing that tax from 39 cents to $1.01 per pack, pushing the cost of most packs of smokes beyond the $4 mark. (Besides federal tax increase - several states want to do the same..)

This version was backed by the House leadership, including Speaker Bobby Harrell, R-Charleston, who helped derail a different version last year following Gov. Mark Sanford's veto. State Rep. Leon Stavrinakis, D-Charleston, said he is fine with the new version, which he expects to survive a near-certain veto from Sanford.

A routine third reading today will send it to the Senate, which also passed a version of the tax last year.

Forty-four states and the District of Columbia have raised their tobacco taxes since 2002, and even at 57 cents per pack, South Carolina's new levy would remain well below the $1.21 per pack national average.

Reference: House OKs cigarette-tax increase by Robert Behre, The Charleston Post and Courier, 4/3/2009.

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