DAVID ROSMAN: Petition to raise cigarette taxes majorly flawed

Wednesday, June 29, 2011 | 2:42 p.m. CDT; updated 8:55 p.m. CST, Tuesday, January 24, 2012

Coming to a shopping center or mall near you, the current controversial flavor of the week and another petition to sign: The Initiative Petition Relating to Tobacco Taxes.

Normally, I would be rooting for this ballot initiative to be presented to the public in November and reduce the number of smokers in the state. Even the tobacco-producing states have higher taxes than Missouri, so this may be a good thing, right? Yet, as the late Billy Mays would say, “Wait, there’s more!”

The front man of this effort is Marc Ellinger of the Jefferson City law firm Blitz, Bardgett & Deutsch, representing a group that calls itself “Healthy Missouri.” As of this writing, Ellinger has not returned my telephone call. Ellinger did have an interview with Bob Priddy of MissouriNet.

The true originators of this bill remain unknown because Ellinger refused to elaborate as to who the backers are. They are not, as Ellinger wants us to believe, a “grassroots effort” or a loosely knit organization of wheezing cigarette smokers. Regardless of what Ellinger said, there is no doubt in my mind that “they” are the infamous "big four" tobacco product manufacturing companies in the U.S.

This initiative proposes an increase in sales taxes of $1 on each package of 20 cigarettes produced by “certain” tobacco companies. I am a great fan of increasing the sales tax on cigarettes, but the term here that is quite disturbing is “certain.” It appears, based on Priddy’s interview, that the proposed initiative would leave out the big four tobacco manufacturers: Brown and Williamson, Lorillard, Phillip Morris and R.J. Reynolds. Why?

On the surface, this proposal closes the retail price inequity between the big four and the generic manufacturers. To close this gap of approximately $1 per pack of 20, a tax specifically focused on the generics would bring the retail price to par with the big guys.  The petition claims this would increase the coffers between $20 and $100 million, with the money going to “tobacco education and cessation programs,” not the general fund.

To put this in some perspective, imagine if an unknown entity hires an attorney to write and submit a ballot petition that says there needs to be a $50 tax on generic medication so that the price would be on par with the brand names.

This tobacco proposal needs to be countered with one that would increase on all cigarette sales. Maybe not to New York's $4.35, but perhaps somewhere in the middle, and off the bottom of the pile at $0.17.

Then, take one-third of the revenue and put it in the Master Settlement fund with no refunds to any tobacco producer. Another third should go to the Missouri K-12 public education system and higher education to support schools, universities and colleges. The final third needs to go to the various Missouri public health programs, including Medicaid.

This would also reduce the number of new youth smokers by putting the product out of financial reach for some. That increase would also lead others to smoking cessation programs that could be paid by the state with the extra revenue generated.

This is not a “win-win” proposition, but it is the best compromise.

Should you sign the petition? Yes, and then you should vote down the proposal for being inadequate, harmful to small business and not protecting the citizens of Missouri.

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Paul Allaire June 29, 2011 | 3:50 p.m.

This makes me want to gag, but I am now obliged to defend the four large tobacco companies. In addition to the whopping seventeen cents, they pay some sort of "tax" because of an old legal settlement. The other makers were, for one reason or other, left out of the lawsuit. So they don't pay anything except for the whopping seventeen cents. So there actually is some impropriety going on. Of course, the law suit would have not been had the four large companies tried to buy government scientists, distort and fabricate data, and cover up the fact that tobacco sucks.
The money from this "tax" or settlement has never been spent in the manner intended. It seems to now be a permanent tax on only some tobacco manufacturers for things which took place over twenty years ago. That said, I have no reason to believe that a carton of generic cigarettes are any less detrimental to one's health than the premium brand. Possibly every maker should be made to pay the tax. I'm not sure that a ballot initiative is the right way to do that. Let's congratulate the big four for reminding us that tobacco sucks.

(Report Comment)
David Rosman June 29, 2011 | 6:40 p.m.

Paul - The big four are still paying off that settlement, so it is not so "old."

Here is the counter proposal my editors took out:

This proposal needs to be countered with one that would increase cigarette taxes on all cigarette sales, maybe not to New York State’s $4.35, but somewhere in the middle and off the bottom of the pile at $0.17. The average tax on cigarettes in the U.S is $1.45. If you take the median average, $1.34. $2.00 is the most occurring tax on cigarettes, the mode, in the 50 states and the District of Columbia. If the tobacco companies get smart and make packs of, lets say, 10 or of 40, then charge the average tax per cigarette of $0.20.

As far as what the moneys are being used for now, I did not dive into that. However...

We are ranked as one of the fattest states in the union, have the lowest cigarette tax, and have a legislature who wants to put the burden on the poor, unemployed and handicapped. So what is wrong with this picture?

(Report Comment)
Paul Allaire June 29, 2011 | 7:39 p.m.

In other words, the large tobacco companies want to put an extra tax on the smaller companies only so that they can force them to have to charge nearly the same as themselves, because they are still paying off one expensive lawsuit. Do I have that correct?
And if I remember correctly, the money was said to be for the victims of the tobacco companies. However, it appears to me that the money is going for general appropriations, as nobody really cares about whoever it was who was stupid enough to develop a two pack a day habit. And you are correct in that this is beside the point. I just felt compelled to throw it out there anyway, for a sort of general perspective.
I would think that the tobacco companies would have a better chance going back to court and having the award quashed because, as far as I can tell, none of that money is going to the people who the suit said it was to be for.

Do you believe that they will be able to hire solicitors brash enough to convince the general Missouri population to sign a petition calling for a dollar extra tax on low cost cigarettes? In Missouri?

I can't imagine it.

(Report Comment)

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