May 29, 2020
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Lawmakers eye tobacco tax hike

Public health advocates and some Maine lawmakers are supporting a proposed $1 state tax increase on a pack of cigarettes. The measure is being promoted as a way to reverse a recent spike in youth smoking in Maine and as a source of much-needed revenues for the state budget. But the proposed tax, estimated to generate about $26.6 million annually, faces opposition from Republican legislators, the tobacco industry and Gov. John Baldacci.

A spokesman from Baldacci’s office said Tuesday that the governor recognizes the public health benefit of hiking the tobacco tax but does not see the proposed increase as “a viable solution for balancing the budget.” Baldacci does not support the proposal, the spokesman said.

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According to a report released last month, youth smoking rates in 2008 rose for the first time in more than a decade. The State of Tobacco Control report showed that self-reported underage teen smoking rates rose from 14 percent to more than 18 percent between 2006 and 2007. This represents the first increase since 1997, when the rate was more than 39 percent.

The cost of a pack of cigarettes in Maine now hovers around $6. That includes a $2 state tax, significantly higher than the national average of $1.34. The last state tax increase was in 2005. The most recent federal tax increase took effect in 2009, a hike from 61 cents a pack to $1.

According to the national Campaign for Tobacco-Free Kids, a one-dollar state tax increase on a pack of cigarettes would lead to an 11 percent decrease in youth smoking in Maine.

“It has been proven that when the price of cigarettes and other tobacco products is raised, people stop smoking,” said Megan Hannan of the Maine chapter of the American Cancer Society. That’s especially true for teens, she said, for whom scraping together the cost of a pack of cigarettes is typically more challenging than it is for adults.

The tax increase also is supported by the Maine chapter of the American Lung Association.

“Keeping tobacco prices high is an important part of our strategy [to reduce smoking rates],” said lung association executive director Ed Miller. Maine also must continue to fund prevention and cessation programs, he said.

Miller said many Maine lawmakers are looking favorably on the idea.

“Legislators understand this … is clearly justified as health policy, not just as tax policy,” he said.

But Rep. Emily Cain, D-Orono, House chairman of the Legislature’s Appropriations and Financial Affairs Committee, said the tax proposal has been presented to her committee “along a partisan divide,” with support from Democrats and opposition from Republicans. It’s too soon to tell, she said, whether it will be seriously debated for inclusion into the final supplemental budget package.

“There is undisputed research showing that when you raise taxes, fewer people buy cigarettes,” Cain said. “But no matter how compelling the public health argument is, the ‘T’ word is a lightning rod in Augusta right now.”

Sen. Joseph Perry, D-Bangor, co-chairman of the Taxation Committee, said he is seeking more information from Maine Revenue Services about the impact of raising the tobacco tax. Although lawmakers in 2007 turned down a tobacco tax proposed by Gov. Baldacci as a way to fund the DirigoChoice insurance program, Perry said the current state budget crisis is so dire that it may get more consideration this time around.

Rep. Anne Perry, D-Calais, House chairman of the Health and Human Services Committee, said health and human services cuts under consideration are so severe they threaten Maine’s ability to rebound from the current recession. The tobacco tax revenues could avert some job losses and thereby help preserve the network of small businesses that form the “fabric of Maine’s economy,” she said.

One of Perry’s colleagues on the committee, Sen. Peter Mills, R-Cornville, said the proposed tax wouldn’t generate enough money to meaningfully offset the devastating cuts the Legislature is charged with making. Mills, who is running for governor, predicted that legislative Democrats will push through not only the tobacco tax but also other liberal initiatives, and that the resulting supplemental budget will be “horribly political” and suffer from an acute lack of bipartisan support.

Spokesman Bill Phelps of Philip Morris USA in Richmond, Va., said Tuesday that the tobacco industry is watching the debate in Maine. Maine smokers already pay more than in most other states, he said, and higher taxes would worsen an “unfair burden.” Phelps cautioned that cigarette sales account for about 30 percent of sales in convenience stores and said lost business because of higher tobacco taxes could put stores out of business.

Phelps said the tobacco industry supports efforts to prevent tobacco use by young people. But he said states should promote education and cessation programs using funds from the 1998 multistate settlement with the industry rather than by raising taxes.

Maine consistently ranks high among states in its use of settlement funds for combating tobacco use.

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