JEFFERSON CITY, Mo. -- Missouri, the state with the nation’s lowest cigarette excise tax, has not one, but two proposals to increase that rate. Even more surprising, both initiatives are being supported by different cigarette manufacturers, The Kansas City Star reported.
One measure would increase Missouri’s lowest-in-the-nation tax of 17 cents per pack to 23 cents, using the revenue generated by the increase to fund road repairs. Although it has previously opposed increases to the state excise tax, the Missouri Petroleum Marketers and Convenience Store Association (MPCA) is supporting this option, which is funded by several value-driven cigarette companies that include Cheyenne International LLC and Xcaliber International Ltd.
When this measure was proposed last August, MPCA executive director Ron Leone acknowledged the $800 million in projected tax revenue is not enough to fully address issues with Missouri’s roads and bridges, but said it would “provide some much needed revenue for our crumbling transportation infrastructure.”
The other measure would raise the excise tax to 60 cents per pack over time, putting the tax revenue toward early childhood education and preventive health programs. This proposal has been backed by the Raise Your Hand for Kids nonprofit, with Reynolds American Inc. donating $1.2 million in support.
“Reynolds Tobacco opposes unfair and excessive tax increases,” Reynolds spokesperson David Howard told Tobacco E-News. “Over the last several years, there has been strong and growing momentum to increase Missouri’s cigarette excise tax. We believe this measure calls for a reasonable tax increase, phased in over four years, and revenue generated from the tax increase goes toward important needs in Missouri: early childhood health, education and youth smoking prevention programs.”
Leone of MPCA has voiced his opposition to more than tripling Missouri's excise tax.
“We think the unreasonable and outrageous tax increases are going to fail,” he said. “People are going to say ‘no’ to those again.”
The key difference between these two proposals comes down to the 1998 Master Settlement Agreement, which requires major tobacco manufactures (including Reynolds and Philip Morris) to make annual payments to cover smoking-related health-care costs. Smaller tobacco companies, such as Cheyenne and Xcaliber, were not included in that settlement.
For more than 10 years, the Missouri legislature has refused to pass a law that would include smaller tobacco companies in the Master Settlement Agreement payments (as requested by the state’s attorney general and as other states have done). The Reynolds-backed tax proposal would address this disparity with an additional tax of 67 cents per pack for smaller tobacco companies; the proposal backed by Cheyenne and Xcaliber would only address the state excise tax.
In May, the initiative supported by Raise Your Hand for Kids encountered trouble when a Cole County judge ruled the proposal overestimates the revenue that would be raised and directed a review of the projection. This, according to a report by St. Louis Public Radio, would invalidate the petition Raise Your Hands for Kids turned in to get the measure on the ballot.
The organization said it would appeal the ruling.
Missouri will finalize its November ballot, which both proposals are seeking to be on, by Aug. 9.
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