Dollar-a-pack cigarette tax hike proposed, despite Hogan pledge

By Rebecca Lessner

For MarylandReporter.com

Despite Gov. Larry Hogan’s promise to cut taxes, Sen. Richard Madaleno and the Marylands Citizens’ Health Initiative are pushing to raise taxes on cigarettes by $1 to $3 a pack, in order to fend off Hogan’s budget cuts to health care.

Madaleno believes that an increase tax on cigarettes could provide necessary funds to support the possible 1,400 pregnant women between the 185% and 250% of the federal poverty level who will be denied Medicaid coverage under Hogan’s budget.

Madaleno told the Senate Budget and Taxation committee Wednesday that he has a different vision than Hogan has laid out: “One that keeps these commitments to health care, one that doesn’t throw pregnant women off of health insurance, one that continues to do the best cancer research in the world, one that keeps young people from the scourge of smoking.”

The increased taxes would raise $95 million in fiscal 2015, according to the Department of Legislative Services. It also requires $11 million in increased spending for tobacco cessation programs starting in fiscal 2017.

Taxes increase to nearly 80% of wholesale price

The last tobacco tax increase was in 2008, raising the state tax level from $1 to $2. The revenue generated from that tax was used to expand Medicaid eligibility to 100,000 low-income people. Madaleno believes raising the tax once more will accomplish healthcare goals in the same way as 2008’s tax increase, which also provided funding to cancer research centers throughout Maryland. The governor’s proposed budget cuts that funding by more than half, he said.

“This is economic competitiveness, this is about positioning ourselves for the future,” Madaleno said. “This is about making sure that our residents have access to the best medical care in the world. “

In the State of the State address Wednesday, Hogan stressed “40 consecutive tax hikes” that have taken an additional $10 billion from Marylanders. He said, “The people of Maryland simply cannot afford for us to continue on the same path of more spending, more borrowing, more taxes, and politics as usual.”

But Vincent DeMarco, president of the Marylands Citizens’ Health Initiative, feels confident that the bill has a chance of passing, as governors from Kansas, Ohio and Nevada have recently increased tobacco taxes by $1.

“Republican governors proposing these tobacco tax increases reflect the fact that the public supports this, Democrats, Republicans, Independents and everyone,” he said.

The tax would jump from $2 to $3, increasing the other tobacco products (OTPs) tax rate from 30% to nearly 80% of the wholesale price or a specified amount, according to DLS.

Gas station owners concerned about losing customers to other states

A panel of service station owners told the committee that raising the tobacco tax for the third time will push consumers into surrounding states.

Jeff Zellmer, representing the Maryland Retailers Association, said the bill deprives retailers of business.

“In Virginia the difference between a carton of cigarettes and this bill would be $27 a carton.” Zellmer said, going on to say while consumers are taking their business to states with lower cigarette taxes, they will also pick up other items they would have bought in Maryland.

Fred Parsons of the George J. Falter Company, a company that supplies convenience stores in Maryland, said “When all the (tobacco) taxes started increasing, we started to pursue business in Virginia, Pennsylvania and in Delaware because that’s where the sales went.”

Parsons feels that SB 37 will also accidentally increase black market sales of tobacco products, saying they had witnessed vans bringing cigarettes in from Pennsylvania.

Sen. Adelaide Eckardt, a Republican representing the Eastern Shore, is concerned that the addictive quality of cigarettes may push kids to turn to other drugs once their drug of choice becomes too expensive.

Student asks lawmakers to combat tobacco industry

Seventeen year-old Devan Ogburn, Maryland Association of Student Councils representative from Saint Mary’s County, supports SB 37.

“The tobacco industry is aggressively targeting our youth,” Ogburn said. “Low costs and placement next to candy is not a coincidence. My request of you is to help my generation fight the tactics of the tobacco industry. If they’re going to keep the prices low, then we need to keep the taxes high.”

Ogburn addressed the concern of teens driving across state borders to buy cigarettes, rebuttling with; “How many teens are really going to take that time?”

Since tobacco tax increases, the rate of smoking in Maryland has dropped by 32% in the past 12 years to 18%, compared to a national average of drop 19.9%. According to the American Lung Association, Maryland has the 11th lowest smoking rate in the country and is the 4th lowest state with students’, grades 9-12, who are smoking.