$1 cigarette tax is likely up in smoke

A heavy lobbying campaign to increase Vermont’s cigarette tax will continue its legislative push in an effort to reduce smoking rates while raising an additional $10 million in revenue.
House members recently voted on a 27-cent increase on the state’s cigarette tax (currently at $2.24) before the Senate voted last week on a 53-cent hike in the Miscellaneous Tax bill. But the Coalition for a Tobacco Free Vermont says that is not enough to discourage smokers from lighting up.
"We are strongly still championing at least a 10 percent increase. We would love a dollar because that would bring the best public health benefit to Vermont, but you need to have at least a 65 cent increase (that would be a 10 percent increase) ... studies have shown that at least a 10 percent increase is needed to have a public health impact," said coalition coordinator Tina Zuk.
"Twenty-seven cents is just not worth it, and it doesn’t even produce that much revenue for the state and it probably won’t have any public health impact because you need to have a significant increase for [smokers] to even notice it," she said.
Anti-smoking groups have pressured lawmakers to support a $1 increase in the tax, citing the hike as the most effective way to prevent youth smoking. Raising the tax would create a $10.2 million increase in new revenue as well, according to the coalition.
"I think it’s important to not only look at the budget now, but down the road. We can’t be short-sighted with what we’re doing fiscally now because we’ll pay for it later," Zuk said.
But Gov. Peter Shumlin, a first-term Democrat, has lobbied for a smaller tax bump to keep Vermont on an even playing field with neighboring states.
"I don’t object to cigarette taxes, but right now, Vermont has $5 million of unexpected cash for the 2011 budget because our cigarette tax is lower than New York and competitive with Massachusetts and New Hampshire. The result has been that people have flooded into Vermont to buy cigarettes. While they’re there, they buy other things in our stores," he said.
The administration also disputes the full $1 increase would bring in $10 million annually, saying Vermont could see a loss in sales instead because other states will reap the benefits of lower cigarette prices.
"Those who say a dollar increase will bring us $10 million are smoking something other than tobacco," Shumlin told the Reformer. In the end, the General Assembly will go home approving a small increase in the cigarette tax, but it will not be "penny-wise and pound-foolish," he added.
Rebecca Ryan, director of Health Promotion and Public Policy for the American Lung Association, said Shumlin is pushing for real health care reform but will not address tobacco use.
"Vermont was a national leader in reducing the devastating impact of tobacco use, but the state’s investment in programs to prevent kids from smoking and helping adults quit has been dramatically reduced over the last three years," Ryan said. "In addition, the evidence is clear that increasing the price of a pack of cigarettes is most effective at preventing kids from smoking, Vermont has not had a significant increase since 2006 and the youth smoking rate has not changed since 2005."
Sen. Jeanette White, D-Windham, said the proposed cigarette tax and the rest of the Miscellaneous Tax bill heads to the Committee of Conference.
"The Senate committee ended up with 53 cents, so there were a lot of differences between the House version and the Senate version," she said. "The conference committee is set up with three Senate members and three House members and they go and they do the final bill."
Any final compromise between the two proposes are not likely to increase, but find a median between the two.
The coalition has actively lobbied for cigarette tax increases since 2002 when the levy jumped from 44-cents to $1.19, and another 80-cent hike in the next four years.