AUGUSTA, Maine – A coalition of health advocates and businesses is urging lawmakers to pass a $1.50 increase in the state excise tax on cigarettes to bolster the Fund for a Healthy Maine, reduce teen smoking and help economic development.
But the proposal faces strong opposition, including a veto threat from Gov. Paul LePage.
At a news conference in Augusta on Monday, Tina Chapman, president of the Mid-Maine United Way in Waterville, said the tax increase would save 6,000 lives — and more.
“It will save $295 million in health costs,” she said. “It will raise $35 million every year in new revenue of which a portion can be used to preserve the Fund for a Healthy Maine.”
More than 150 businesses from throughout the state signed a petition supporting the increase in cigarette taxes to $3.50 a pack. That would make Maine’s tax the highest in New England, surpassing the $3.46 per pack tax in Rhode Island. New Hampshire’s tax rate is $1.76 a pack with a proposal in its legislature to reduce the tax rate by a dime.
Kurt Stoll, executive director of the Blue Hill Chamber of Commerce, said keeping the fund healthy is crucial to economic development efforts with health insurance costs a major concern of business.
“The fund is an essential tool in our state’s economic development strategy,” he said. “Keeping it strong is simply the best thing we can do, at no cost to taxpayers, to reduce health costs across the board so businesses can start improving their bottom line.”
But it’s unlikely the cigarette tax measure will ever become law. The bill faces strong opposition in the Legislature’s Taxation Committee and the governor’s office.
“It’s not going anywhere,” said Rep. Gary Knight, R-Livermore Falls, the co-chairman of the Taxation Committee.”No tax increases are going to pass this committee or this Legislature.”
Knight said he personally opposes smoking and recognizes the health risks from smoking. But he said a tax is a tax, and the state is already doing a lot to encourage Mainers to stop smoking.
During his campaign for governor, LePage said he would “not support any tax increases, or fees because they really are taxes, and we are too taxed already.”
He has not changed his mind, press secretary Adrienne Bennett confirmed Monday.
“He would veto that if it were to come across his desk,” she said. “The governor does not support increased fees or taxes.”
But Susan Corbett, CEO of Axiom Technologies in Machias, said there are financial reasons to support the tax.
She said while $20 million of the new revenue generated by the tax hike would go to replace funds being shifted from the fund to help balance the state budget, the remainder could be used to invest in economic development.
“What would you do with $15 million a year to spend in creating jobs?” said Corbett, whose company provides Internet service. “There are plenty of good options out there like investing in broadband infrastructure.”
LePage has proposed using about a third of the yearly revenue from the Fund for a Healthy Maine to help balance the budget. The fund receives most of its revenue from the annual settlement payments from tobacco companies as the result of the multistate lawsuit against them that was settled in 1998.
Sen. Richard Woodbury, I-Yarmouth, a member of the tax panel, argued the tax is a true win-win situation where the benefits from lower health care costs are as significant as the revenue raised by the tax. He said the higher per pack price would discourage young people from smoking. He is concerned that the teen smoking rate has gone up for the first time since 1997.
“The cigarette tax is one of those rare taxes that not only raises revenue but also accomplished an important social goal in itself. It reduces smoking,” said Woodbury. “It stops young people from starting to smoke.”
Ed Miller of the American Lung Association acknowledged the legislation faces an uphill battle, but it is a battle he says that must be fought. He said he has been involved in each of the battles to raise the cigarette tax over the last 25 years.
“It’s never something that people go around saying is going to be a slam dunk and we are going to do this, “he said. “It’s a tough, tough issue for many politicians.”
The tax committee has yet to consider the proposal.