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Friday, April 26, 2002

Cigarette tax increase divides Ohio legislators




By Debra Jasper, djasper@enquirer.com
Enquirer Columbus Bureau

        Legislators expect a heated battle over raising the state cigarette tax by 50 cents a pack in an election year to balance the budget.

        “Solving these budget problems is never easy,” Senate President Richard Finan, R-Evendale, said. “It's always a fistfight.”

        Backers of the bill, including Gov. Bob Taft, hope the proposed cigarette tax increase from 24 cents to 74 cents would raise $373 million in its first full year. That money would be used to help plug a projected $500 million deficit this fiscal year and a $750 million shortfall starting in July.

        In addition, the plan would allow lawmakers to use up to $290 million from the “rainy day fund” and raise another $150 million by not passing on tax cuts that were part of President Bush's economic stimulus package.

        Ohio business taxes, now linked to the federal tax code, would be reduced under Mr. Bush's plan. But the Senate plan would uncouple the state's business taxes from the federal tax code.

        Mr. Finan said the decision to raise cigarette taxes was driven in part by Michigan, which has a 75-cent tax on cigarettes. Kentucky's cigarette tax is 3 cents per pack, Pennsylvania's is 31 cents, West Virginia's tax is 17 cents and Indiana levies 15.5 cents.

        The Michigan tax, Mr. Finan said, “puts less pressure on the border, at least the northern border.”

        He said the 50-cent cigarette tax increase “was felt to be a fair number” and could discourage Ohio's youth from taking up smoking because they won't be able to afford it.

        Chris Schulte, spokeswoman for Tobacco-Free Ohio, said each Ohio household now spends $427 in taxes for tobacco-related health care expenses when only 27 percent of the state's population smokes.

        The state raises $269 million from its cigarette tax of 24 cents, but Ms. Schulte said it spends $597 million on Medicaid to treat tobacco-related illness.

        State Sen. Jeff Armbruster, R-North Ridgeville, said the measure could hurt “consumers as well as mom and pop retailers, especially in border counties, who stand to lose significant business to other states.”

        Democrats also blasted the bill, saying it doesn't address the state's larger problem of declining revenue.

        “Every proposal just puts our finger in the dike and isn't a comprehensive plan for turning around the state,” said Sen. Eric Fingerhut, D-Cleveland.

        He said he supports raising taxes on cigarettes, but believes the money should be used to campaign against smoking. “Anybody who believes a cigarette tax is a long-term solution is kidding themselves,” Sen. Fingerhut said. “In the long run, the revenue will decline from this source as people stop smoking.”

        Even if the bill does pass the Senate, it still faces heated debate in the Ohio House. Gary Cates, R-West Chester, said it's too early to say whether House members can agree to back the plan.

        “The whole budget is going to be a big debate,” he said. “Anytime you've got to fill a billion-dollar hole, the choices you are presented with are never easy ones.” Jennifer Detwiler, spokeswoman for House Speaker Larry Householder, R-Glenford, said the speaker is open to raising cigarette taxes as long as it doesn't hurt southern Ohio tobacco farmers.

        Patricia Clancy, R-Colerain Township, said there is an irony in the state's attempt to balance part of the budget with a tax on cigarettes. “The goal out there is to cut down on smoking. So though we may want people to smoke less, that revenue would be really helpful,” she said. “It's a double-edged sword.”

        Herb Asher, professor of political science at Ohio State University, said while increasing any tax is an unpopular option, legislators probably won't face much political wrath for making it more expensive to smoke.

        “Most people don't smoke so there won't be a great hue and cry,” he said. “It's one of those more palatable taxes along the lines of, "you choose to do these sorts of activities so you pay for them.'”

        The state must balance its $45 billion budget by June 30, when the fiscal year ends.

Related stories:
Tax hike could lead smokers to N.Ky.

       



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