Democrats eye hike of cigarette tax in informal hearing

The Republican super-majority wouldn’t let them do it through official channels, so House Democrats held their own informational meeting on a proposal to hike the state’s cigarette tax.

The idea of the tax hike was tossed around by Rep. Dennis Lake, R-Blackfoot, in the early days of the session, but he axed the proposal because he believed members of the House Revenue and Taxation Committee wouldn’t go for it.

Democrats wanted the issue to at least receive a hearing and protested last week on the House floor by forcing reading of all legislation prior to voting, meaning a delay to the end of the session.

Democrats held an informal hearing on the matter Monday, a meeting that nearly filled the House Health and Welfare Committee room in the lower east wing of the Capitol. Though many were there to testify in favor of the tax hike, not all wanted to do so.

Representatives for two Idaho convenience store chains testified that the hike would hurt businesses and consumers. Andrea Jackson of Jackson’s Food Stores said that her stores’ profit margins from ordering cigarettes are thin and would likely decrease with a tax hike.

Charley Jones of Stinker Stations pointed out that smokers pay enough and that a hike of cigarette taxes helped fund the $125 million renovation and expansion of the Idaho Capitol. “It’s beyond me why cigarette smokers are paying for it,” Jones mused. “Smokers pay much, much more than their fair share of taxes. “

Getting into the politics of the matter, Jackson said that it’s not right to force smokers to fund various facets of state government. “To single out one group in our society to pay for that is unfair,” said Jackson. Jones echoed the sentiment, but also said that government should work to control the populace. “Taxes aimed at punishing bad behavior … I think that’s a problem,” Jones said.

But supporters offered their own take on the proposal. Some argued that the increase would help public health, while others said it would help fund government programs.

Karen Des Aulniers of the Treasure Valley Alcohol Drug Coalition said the hike would aid public health. “It decreases uses. It decreases medical costs. It needs to be done,” said Des Aulniers. “Why isn’t everyone in favor of raising the tax?”

Andrea Shipley of the Idaho Community Action Network (ICAN) said that cuts made in the last two years to Medicaid and public education are the result of a Legislature unwilling to look at tax and fee hikes. “We do not have a budget crisis,” said Shipley. “We have a revenue crisis.”

And what revenue a tax hike could bring in. Jack Miller of the Idaho Department of Health and Welfare contended that Idaho could raise as much as an additional $77 million in taxpayer dollars annually for program. He also said that smoking-related illnesses cost taxpayers as much as $236 million each year in health care expenses, with $83 million of that being paid out by the Medicaid program.

Idaho charges 57 cent per pack of cigarettes. Lake’s measure – as well as a similar one drawn up by Rusche – would hike that figure by $1.25. Idaho’s tax per pack is the eighth-lowest in the nation.

But a hike of the tax wouldn’t necessarily mean lower smoking rates for Idahoans, however. Dan John of the Idaho State Tax Commission told Democrats that when rates are raised, citizens will often look elsewhere to find cheap cigarettes. “If you double the tax, you are not going to get double the revenue,” said John.

One presenter, Corey Jackson of Capitol Distributing, told lawmakers there are more than 8 million Internet sites through which smokers can purchase untaxed cigarettes. Jackson said that a hike in the state’s tax would fuel these sites and mean fewer dollars for the state and local businesses. “It’s going to cost jobs,” said Jackson. “It’s going to hurt people.”