By Beth Johnson, special to Statehouse Report | This week Representative Todd Rutherford called for the state’s leaders to look for new sources of revenue. “The fact is, South Carolina is broke”, Rutherford said. The American Cancer Society Cancer Action Network (ACS CAN) has a viable solution. ACS CAN is asking the state legislature to consider increasing the state cigarette tax by $1.50 per pack. Increasing the cigarette tax is a win for revenue, a win for health care cost savings and a win for public health.
A $1.50 per pack cigarette tax increase would generate an estimated $264.51 million in new annual reliable revenue. Furthermore, if the legislature increases the other tobacco products (OTP) tax to 47 percent of the wholesale price to parallel the new cigarette tax, it would generate an additional $61.4 million. With a current tax of 5 percent on the manufacturer’s price, South Carolina has one of the lowest OTP tax rates in the country. Low OTP taxes make them more appealing to price-sensitive consumers including youth.
Every state that has significantly increased its state cigarette tax has also boosted its state revenue, despite reduction in tobacco use from the tax increase. Tobacco taxes are one of the most predictable sources of revenue that states receive. In fact, tobacco tax revenues are more predictable over time than other major revenue sources like state income tax or corporate tax revenues.
Tobacco use remains the number one cause of preventable disease and premature death. The annual health care costs directly caused by smoking in South Carolina are $1.9 billion and the portion covered by the state Medicaid program is $476 million. The state and federal tax burden from smoking-caused government expenditures for each South Carolina household is $911. In addition, annual smoking-caused productivity losses in South Carolina are $2.35 billion. Let me say this a different way, smoking is taking a toll on our great state and it’s time we consider every option available to combat the effects it is having on our economy and the future of our state. Tobacco-related illnesses are expensive and harmful for all of us.
An estimated, 7,200 adults die prematurely from smoking each year in South Carolina and nearly 2,500 kids under the age of eighteen become new daily smokers. Significant increases in tobacco taxes are one of the most effective ways to prevent kids from using tobacco and to help adults quit. A $1.50 per pack increase would help 37,900 adults who smoke quit and would keep 26,500 youth under the age of 18 from becoming adults who smoke. If nothing is done to curb the tobacco epidemic an estimated 103,000 South Carolina kids under 18 today will ultimately die prematurely from smoking-related diseases.
South Carolina’s cigarette tax ranks 45th in the country. The tax on OTP, such as cigars, hookah, smokeless and roll-your-own tobacco, is taxed at only 5 percent of manufactures’ price, which is the lowest among the states that use the same method of taxation. Given the heath and economic costs, it is clear we have an epidemic in South Carolina, an epidemic caused by tobacco use. The good news is we can defeat this epidemic through a significant increase in tobacco taxes and provide the state with a steady and reliable source of revenue. We know we have a long way to go in South Carolina but ACS CAN is here to help work on the toll of tobacco in our great state.
Beth Johnson is South Carolina government relations director for the American Cancer Society Cancer Action Network.
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We Can Do Better, South Carolina!