TALLAHASSEE, Fla. -- Florida Governor Charlie Crist didn't try to hide his motives when he signed into law a $1-per-pack cigarette tax hike Wednesday, reported The Orlando Sentinel. "I view it more as a health issue than a tax issue," said Crist, a Republican who broke with a career-long opposition to tax increases. "Ronald Reagan used to say if you want to kill something, tax it. It wouldn't be bad if we killed smoking." As of July 1, Florida's new cigarette tax is $1.34 per pack. An equivalent increase applies to smokeless and pipe tobacco, but not cigars.
The [image-nocss] extra $1 tax is expected to generate more than $900 million a year, to be used to offset Medicaid costs and fund cancer research, said the report.
With the increase, Florida's cigarette tax goes from sixth-lowest in the nation to slightly above the national average of $1.23 a pack, the report added. Florida's neighbors have some of the lowest levies in the nation: Georgia (37 cents), Alabama (42 cents) and South Carolina (7 cents).
David Sutton, a spokesperson for New York City-based Altria Group Inc., the parent company of Philip Morris, Richmond, Va., told the newspaper that Florida's tax hike would prompt many consumers to seek tax-free ways to buy their smokes, whether on an Indian reservation or the Internet. "Obviously, it's a big hit to our consumers and to retailers as well," he said. "You've got a very difficult economy out there."
Crist, who is running for U.S. Senate, had never supported a tax increase in his political career dating back to his time in the state Senate in the 1990s, the report said. At a news conference, the governor said the budget doesn't include any "broad-based tax increases," noting most Floridians don't smoke.
Other states are moving toward increased tobacco levies. Among them are Texas, Wisconsin, Vermont and California. In Texas, the state Senate voted Tuesday night to raise state taxes on smokeless tobacco, with some of the money going to help pay for a program to encourage doctors to practice in rural areas, said the Associated Press.
Instead of basing the tax on price, smokeless tobacco would be taxed by weight. The change is expected to raise about $105 million.
The tax change is also tied to a tax cut for some small businesses. A Senate plan makes the increase in the smokeless tobacco taxes a tradeoff for reducing a tax levied on businesses that make less than $1 million a year.
The bill, sponsored by State Senator Juan "Chuy" Hinojosa (D), was approved 29 to 2 and must go back to the House for final approval.
"It sounds to me like we're interfering in the free marketplace," State Sen. Mike Jackson (R) told AP. "What you're doing is artificially raising the price of a product to Texans who choose to buy it just so you can have money to give it away somewhere else."
State Sen. Kel Seliger (R), tried but failed to amend the bill to reduce the tax increase, a move that he said would have still raised about $50 million.
In Wisconsin, if a proposed increase in the cigarette tax passes, the state's American Indian tribes stand to receive $81.5 million in refunds over the next two years, said The Wisconsin State Journal, triple what the tribes got several years ago.
The tax refunds on cigarettes sold by tribal retailers have shot up in recent years, as has the cigarette tax itself, raising objections from other retailers about unfair competition and from public health advocates who want the tax levied on as many packs as possible to stop smoking.
The tax would increase by 75 cents per pack under a proposal being debated by the state legislature's budget committee, increasing the rebates by $18.8 million over the next two years, said the report.
"We've felt that this has been extremely unfair," Brandon Scholz, president of the Wisconsin Grocers Association, told the paper. The tribes "should remit the tax just like we do."
Ho-Chunk Nation spokesperson Anne Thundercloud told the State Journal that tribes are getting the same share of the tax they always have under agreements worked out between the state and Wisconsin's 11 sovereign tribes. "In order to work cooperatively with the state, the tribes reached an agreement on...the refund as both an incentive for tribes to collect the tax for the state and as a mechanism for the state to collect tax revenues it might otherwise not be able to obtain," she said.
The state is prohibited by federal law from taxing the sales of cigarettes and tobacco to tribal members on reservations, but the state can tax the sale of cigarettes to nontribal members, according to the report, citing thr Legislative Fiscal Bureau.
Under current law and the 11 tribal agreements, the state refunds to tribes the full tax on cigarette sales to tribal members and 70% of the tax on sales to nontribal members. The agreements can be ended by either side with 30 days notice, Linda Barth, spokesperson for the state Department of Administration, told the paper.
Bobbi Webster, a spokesperson for the Oneida tribe, told the paper that the tobacco tax refunds have "become increasingly important" to funding health care, education and housing for the tribe's members at a time of economic hardship and budget cuts.
The state cigarette tax went from 77 cents per pack to the current $1.77 per pack in January 2008. Following that increase, tribes began to sell a bigger share of the cigarettes sold in Wisconsin, boosting their refunds from 3.9% of state tobacco tax revenues to 5.1% this year, the report said. The tax would increase to $2.52 per pack in September under Gov. Jim Doyle's proposed budget.
Cigarette taxes in Vermont appear to be on the rise, but it is unclear how much, reported The Burlington Free Press. Lawmakers would add 25 cents a pack onto the $1.99 the state already charges; Gov. Jim Douglas is pushing for a 45-cents-per pack increase. The difference could be settled in a special legislative session on the budget next week.
Vermont House Speaker Shap Smith is among those who worry that cigarette taxes are not a stable revenue source, because increasing them tends to drive down the number of smokers.
And facing a $21.3-billion deficit, California lawmakers say they are considering a $1.50 per pack increase in the cigarette tax to raise $1.2 billion annually, according to a United Press International (UPI) report. "Given the serious budget shortfall we face, this is the year to pass the tobacco tax," State Sen. Alex Padilla (D) told The Los Angeles Times. "It is needed now more than ever."
At 87 cents per pack, California's cigarette tax is one of the lowest in the nation, said the report.
Previous attempts to raise tobacco taxes in California have failed, in part, because people believe the tax is unfair, Frank Lester, a spokesperson for Winston-Salem, N.C.-based Reynolds American Inc. told the news agency. "The tax tends to be one of the more regressive taxes, meaning it falls on people of lesser means and working families."
Meanwhile, San Francisco Mayor Gavin Newsom (D) has proposed a new per-pack tax on cigarettes to offset the cost of cleaning up discarded cigarette butts, reported AP. The city is studying how high to set the proposed fee, but a preliminary estimate puts it around 33 cents. The plan would have to be approved by the San Francisco Board of Supervisors.
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