Cover Story: SC cigarette tax debate

By Jeff Atkinson - bio l email

CHARLOTTE, NC (WBTV) - Right now South Carolina has the lowest cigarette tax in the country at seven cents a pack.  A bill in the General Assembly would raise that another 50 cents. 

The result $140 million a year in tax revenue to help pay for Medicaid. 

South Carolina's Medicaid program is looking at a huge deficit next year and needs the help.

But Governor Mark Sanford says if the bill comes to his desk, he'll send it right back.  He's against raising any taxes even if it's for something that seems to many like a no-brainer.

The last time South Carolina raised its cigarette tax (1977) a pack cigarettes cost 25-cents a pack.  That same pack runs now $3.80 to $4.30.

Talk of raising the cigarette tax now from 7 cents to 57 cents a pack, an 800-percent increase, has smokers like Anthony Murphy saying  just one word.. well, maybe two words.  "Outrageous.  Outrageous."

The 140-million dollars a year it would bring in would go to help pay for Medicaid, the state's health care program for the poor and disabled,  which is facing a $400 million budget deficit next year.

"I think it's an excellent idea. I think the state needs the revenue," says Deborah Faile, a non-smoker.

Raising cigarette taxes to pay for health care costs isn't a new idea.

Congress did it last year.  Billions of dollars were funneled to provide federal health insurance for children of moderate income families.

And states routinely use cigarette tax money for Medicaid.

So with the state facing a Medicaid deficit why is Gov. Sanford opposed to raising South Carolina's cigarette tax?

State Representative Gary Simrill from Rock Hill says, "He has always said he would veto any bill that raised a tax that did not have an equal tax reduction to make it. Plain and simple."

So now the work for the leadership in the South Carolina House and Senate, who are Republicans like Sanford, is to see if they have enough votes to override the governor's veto.

Simrill wants to raise the state's cigarette tax 30-cents not the full 50-cents which is what's proposed.  That would bring South Carolina's cigarette tax up to 37-cents.. equal to neighboring Georgia.  And still under North Carolina's cigarette tax.. which is 45-cents a pack.

But Simrill's amendment's been defeated.. and that train has left the station.

"The train has left the station but there is a tunnel to go through that is the governor's veto," he says.

Normally in a recession adding on a tax would be political suicide.  But sin taxes are different.  Not to those who smoke however.

"Because everybody hates smokers," says smoker Eric Lohr, "so we get hit with taxes. I don't seem them raising the taxes on any other products.. so why cigarettes?"

Right now the bill has passed the SC House and is headed to the SC Senate.

If the Senate says okay then it's to Gov. Sanford.  He's saying he'll veto, which will probably happen.  This is the same governor you'll remember who said no to taking the federal stimulus dollars.

Sanford was out on the stump Thursday making his case.  He visited a gas station in North Augusta, SC.

The governor calls the tax increase a "real danger" to the state's long-term economic prospects.  He says cigarette tax hikes do not stimulate the economy, grow jobs or improve the state's soil conditions.

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