DOVER, Del. -- Retailers around Delaware are gearing up for a showdown over a proposed 60-cents-a-pack bump in the cigarette tax, but lawmakers expect the increase to be approved this week as they try to balance the state's budget before Saturday's midnight close of the main legislative year, reported The News Journal.
We have committed that it will go to help school construction and to help pay for some programs that people need, and we are very serious about honoring our commitments, said state Senate Majority Leader Anthony J. DeLuca (D). Some of [image-nocss] the new revenue is proposed to help disabled Medicaid patients work full-time jobs without losing some benefits, said the report.
But cigarette dealers said the bill could damage their businesses. Maureen Bradley-Waritz, who manages a First State Cigarette Outlet near New Castle, told the newspaper that more than 3,300 smokers have signed her petition asking lawmakers to reconsider the increase.
If the increase were approved, smokers from Maryland would pay only 2 cents less per pack, on average, in Delaware than they would if they stayed home to purchase cigarettes. Pennsylvania and New Jersey cigarettes would still cost 50 cents to more than $1 per pack more, according to the report, citing an analysis provided to state lawmakers.
When you look at the price of a gallon of gas today, it gets to the point where a smoker really wouldn't save that much by driving here, Bradley-Waritz said. So it hurts out-of-state business, but it also really hurts the people who live here and makes it harder for them to buy cigarettes.
Legislators are proposing a bigger increase than Governor Ruth Ann Minner asked for in January, said the report. Minner proposed investing the $43 million proceeds from a 45-cent increase in a Healthy Life Fund dedicated to health-related programs. Lawmakers instead moved those programs into the general operating budget along with the extra revenue their 60-cent increase would generate, about $5 million more than Minner's proposal.
I think a lot of us had problems with what the governor proposed originally and the way it was built into the budget, said State Representative William A. Oberle Jr. (R), co-chairman of the budget-writing Joint Finance Committee. We could have done the budget without this, but it would have been painful. I think it will fly.
The increase also was aided by the fact that even a 60-cent increase would leave Delaware's prices lower than neighboring states'. That's important because Delaware's cigarette business draws heavily from Maryland and Pennsylvania, where prices are higher because of sales taxes.
We were very deliberate, state House Majority Leader Richard C. Cathcart (R) told the paper. We had the administration run the numbers, and we think we're still competitive, even with this increase.
Karan Gupta, who owns three gas station-convenience stores that cater to interstate customers, worries the tax will cut into her bottom line. When you get an increase in that range, it is going to hurt us, he told the News Journal. It's not just cigarettes. Those customers also buy gas and other products, and we will lose that business, too.
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