Smoking proponents, opponents line up on either side of tax hike

by MARC KOVAC CAPITAL BUREAU CHIEF Published:

Columbus -- Some anti-smoking groups are praising Gov. John Kasich's proposal to increase taxes on cigarettes and other tobacco products.

Some say the governor isn't going far enough and should hike rates even more.

And tobacco groups and other business interests say the plan will hurt lower income residents and could end up leading to job losses.

Thus began the debate last past week on one of the major provisions of the governor's latest tax reform package. The legislation had a first hearing before the Ohio House's Ways and Means Committee March 12, and members expect to split the larger package into separate bills for consideration before separate committees in coming weeks.

Among other tax reforms, the governor has proposed increasing the tax rate on cigarettes over two years to $1.85 per pack from $1.25 per pack. Kasich also wants to equalize taxes on e-cigarettes and other tobacco products, which have been subject to lower rates.

Proponents

Multiple health groups have voiced their support for the governor's plan as offered, including the Ohio chapter of the American Academy of Pediatrics.

"Tobacco use remains the leading cause of preventable death in Ohio and claims nearly 18,000 Ohioans a year," said Micah Berman, an assistant professor of health services management and policy at Ohio State University. "… We know from past experience with tobacco taxes that a 10 percent increase in price leads to a 3-7 percent decrease in adult smoking rates and a 5-15 percent decrease in youth smoking rates. To put that in context, 3 percent of adult smokers in Ohio would be approximately 60,000 people."

Phil Cole, executive director of the Ohio Association of Community Action Agencies, said tobacco taxes are taxes of choice.

"One pack per day smokers already spend approximately $6 a day, or $180 per month, on cigarettes," he said. "That does not include the increased cost of health care for sicknesses and diseases that are more likely to attack smokers. The state of Ohio has no duty to the low-income citizens, or any other citizen, to help them live an unhealthy lifestyle or to make it more affordable."

Higher Hike

Several anti-smoking groups, including the American Cancer Society, the Campaign for Tobacco-Free Kids, the American Heart Association and the American Lung Association, support raising taxes on cigarettes and equalizing rates on other tobacco products and e-cigarettes.

But they indicated the governor's proposal doesn't go far enough, and more resources should be devoted to smoking prevention and cessation programs.

In a joint released statement, members of those groups said, "The proposal to increase the cigarette tax over a two-year period, from $1.25 to $1.85 per pack, would have little to no effect on smoking rates and would be easily undercut by tobacco industry discounting schemes, such as coupons, buy-one-get-one free deals and temporary price cuts."

Opponents

Representatives of business groups and the tobacco industry are not supporting the governor's tobacco tax proposal.

The Ohio Council for Reasonable Business Policy said the plan would hurt retailers and wholesalers. It estimated $100 million in lost profit in the state if the tax increase is implemented.

"This increase puts Ohio retailers and the entire state at a competitive disadvantage," Nate Filler, member of the group and president of the Ohio Grocers Association, said in a released statement. "We already operate on razor-thin margins and we are fighting to survive dealing with an uncertain economy, rising health care costs, and other mandates. This increase, along with the proposed commercial activity tax increase, is going to make it even harder for us to do business in Ohio."

And David Sutton, a spokesman for Altria Inc., the parent company of Phillip Morris, said the tax hike is unfair for consumers.

"Altria's tobacco operating companies oppose the proposed tobacco product excise tax increases in Ohio because we think it is simply unfair to single out Ohio's adult tobacco consumers with a tax increase on tobacco products -- including a new tax on e-cigarettes -- to help pay for tax reform program that benefits all Ohioans," he said in a released statement. "This is a regressive tax increase that will disproportionately burden lower-income Ohioans compared to those with higher incomes. Forty-three percent of adults in Ohio who earn less than $15,000 are smokers. Tax increases on tobacco products and e-cigarettes to help pay for income tax cuts for all Ohio taxpayers creates a significant tax equity problem."

Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.

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