House Dem pushes $1.60 cigarette tax hike

February 7, 2013 • Business

A smoker takes a break outside the Transportation Building at the State Capitol complex Thursday, Feb. 7, 2013 in St. Paul, Minn., where the Minnesota House is hearing a proposal to double the state tax on cigarettes while Gov. Mark Dayton has proposed a 94-cent-a-pack hike. (AP Photo/Jim Mone)

ST. PAUL, Minn. (AP) — An influential Minnesota House Democrat touted her bill Thursday that would more than double the state’s cigarette tax, saying she’s motivated by public health concerns and not additional tax money.

The proposal from Rep. Ann Lenczewski of Bloomington would increase the state’s tax on a 20-pack of cigarettes by $1.60, from $1.23 to $2.83. That’s projected to raise an additional $440 million for the state treasury over two years. But Lenczewski said the main argument for the tax hike centers on studies showing higher-priced cigarettes encourages habitual smokers to quit and discourages others from starting.

“The one thing that potential new smokers are most sensitive to is the price,” Lenczewski said. “Young, new smokers are most sensitive to [auth] prices, and most likely to quit if they feel they can’t afford the habit.”

Gov. Mark Dayton also is proposing a smaller increase of 94 cents per pack. Minnesota’s taxes and fees on cigarettes have not gone up since 2005, and various proposals to hike them are strongly supported by a coalition of health, business and other advocacy groups. But efforts to do so have been complicated by arguments that such tax hikes hit poor people hardest, as well as the difficult political climate in recent years regarding tax increases.

Peter Dehnel, a pediatrician and the medical director of Blue Cross Blue Shield Minnesota, cited studies showing that smoking-related illnesses cost Minnesota $3 billion a year in public health spending.

“To lower that, we have to increase the cost of tobacco. There’s really no other way to do it,” Dehnel said.

Representatives of tobacco manufacturers and wholesalers said raising the cigarette tax would hurt both wholesalers of the product, and mom-and-pop retailers for whom cigarettes still make up a big part of their sales. Hardest hit would be store owners near the borders with Wisconsin, Iowa and the Dakotas, which would all have lower cigarette taxes than Minnesota if Lenczewski’s proposal comes to pass, said Tom Bryant, executive director of the Minnesota Wholesale Marketers Association.

“A tax increase like this will devastate small, family-owned businesses in the state,” Bryant said.

Rep. Bob Barrett, R-Shafer, said he agreed with the public health aims of the bill but raised the criticism that cigarette tax hikes disproportionately hurt lower-income people, who are both statistically more likely to smoke and less able to afford tax increases. Barrett cited his own father, who he said had a two-to-three pack a day habit and died of lung cancer at a young age.

“I grew up poor, very poor,” Barrett said. “He didn’t have money for cigarettes, but he always had cigarettes. An increase like this, at that time probably would have meant another $2,000 a year out of our household income.”

The House Taxes Committee, which Lenczewski chairs, reviewed her proposal but did not vote on it. She said it is likely to be included in a broader tax bill that will get more debate later in the session. There are also cigarette tax-hike proposals introduced in the state Senate, but Democratic leaders in that chamber have so far been more reluctant to back them.

Adam Houtkooper, a 29-year-old technical college student and smoker, was at the Capitol Thursday for a different hearing. He said he was opposed to a cigarette tax increase, calling it “legislating morality through taxes.”

But Houtkooper, a smoker for eight years who said he’s tried to quit several times and usually only smokes a cigarette or two a day, acknowledged a higher price for a pack could affect his habit — or at least his cigarette buying patterns.

“I would probably smoke less, but I wouldn’t stop,” Houtkooper said. “Honestly, I’d probably just buy cigarettes whenever I visit family out of state.”

Associated Press reporter Kyle Potter contributed to this report.

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