He vetoed the bill because it does not include an offsetting tax decrease, added a Bloomberg report. South Carolina's current tax of 7 cents has been in place since 1977, when a pack cost 48 [image-nocss] cents.
"On the cigarette tax, we are where we've always been," Sanford said. "For the last seven years, we've advocated an increase to the cigarette tax, while at the same time insisting that we ought not to raise the overall tax burden on working South Carolinians, but instead counterbalance this tax hike with corresponding tax relief that would better fuel the state's economy and help create jobs. With the state's economy just beginning to emerge from one of the worst recessions in modern history, we're holding to that principle more firmly than ever. In these difficult economic times, we believe it would be sheer folly to impose the largest tax increase since 1985."
He added, "This cigarette tax increase will not solve the healthcare problem in South Carolina. According to the State Budget Office, the revenue from this tax increase will fall short of covering Medicaid growth within two years or sooner. With the recent passage of ObamaCare legislation in Washington, D.C., almost half a million South Carolinians will be added to the state's Medicaid rolls and cost state taxpayers an additional $914 million over the next decade. More comprehensive, market-based healthcare reform is necessary, and indeed this tax hike may end up exacerbating the current problem by pushing needed reform that much further down the road."
He concluded, "In short, I'd respectfully ask the General Assembly to reject the ideas underpinning this billthat we can ask taxpayers to solve problems caused by government, that we can use tax increases to ignore the need to reform government and that we can deal with what is indeed an important healthcare challenge by simply raising taxes."
Sanford immediately tried to rally support to make his second veto of a cigarette tax increase in as many years, gathering House members, the head of the state's largest anti-tax group and a top convenience store operator in his office before he vetoed the legislation, said Bloomberg. Legislators say the next fight is in the House, where the chamber's top budget writer says lawmakers may override simply because they're tired of the issue.
Cigarette tax supporters say the legislation would generate nearly $125 million for the state's Medicaid programs to be used beginning in July 2012 after federal bailout cash for the program ends. It also sets aside $5 million each for cancer research and programs aimed at reducing smoking. And there's $1 million in the measure that would be used for agriculture product marketing.
But that increase would cost South Carolina retailers business to competitors in North Carolina and Georgia where the taxes are lower, said David Jordan, president of the South Carolina Association of Convenience Store and marketing director for R.L. Jordan Oil Co. of NC Inc. He lobbied legislators to make the veto stick because "jobs of my employees, myself, my small company are at risk."
"We don't need South Carolina dollars over into North Carolina and Georgia," Jordan said. Legislators with similar concerns lost in efforts to increase the tax by 30 cents so it would remain competitive with Georgia's 37 cents and North Carolina's 45 cents.
The higher cigarette taxes keep children from starting to smoke and ultimately save the state money, Kelly Davis, the coordinator for the South Carolina Tobacco Collaborative's cigarette tax campaign, told the news agency. "We know as more people stop smoking and young people never start, we're going to be able to benefit from that," Davis said.
The cigarette fight now goes back to the state legislature. The House first will decide as early as Wednesday whether to override Sanford's veto with a two-thirds vote, the report said
Two years ago, House Speaker Bobby Harrell led efforts to uphold Sanford's veto. But the House's top budget writer said last week that legislators are tired of arguing about the cigarette tax and may override the veto this time.
If Sanford's veto is overridden, Missouri would then have the nation's lowest tax at 17 cents a pack, according to the Campaign for Tobacco-Free Kids, a national advocacy group that tracks cigarette taxes and trends. Rhode Island currently leads the nation with a $3.46 tax on each pack.In the midst of the recession and a slow recovery, 21 states have raised their cigarette tax since 2008, including North Carolina. Georgia's last rose in 2003, after the last recession. Meanwhile, the federal tax last year jumped 62 cents a pack to $1.01.
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