Omaha cigarette tax will likely pass

Omaha's new, proposed cigarette tax still appears to have enough support to win approval despite criticism from Gov. Dave Heineman and local businesses, a city councilman said Tuesday. Councilman Ben Gray said he still plans to back the ordinance when the council votes on it, and he doesn't expect any other council members to shift. The measure's sponsor, Councilman Chris Jerram, has said four of the seven council members have agreed to sponsor the measure.

Council members held a public hearing on the proposal Tuesday and were expected to vote next week. The measure would impose a 7 percent occupation tax on tobacco products sold in Omaha — 35 cents for every $5 pack of cigarettes — which would generate an estimated $35 million for a proposed University of Nebraska cancer center. Gray said he's willing to listen to opposing viewpoints, but added: "You're going to have to go a far stretch to try to convince me that not building this cancer center is a bad idea — and that it's a bad idea to use a tobacco tax to do it."

The university's cancer center is expected to cost $370 million, with money coming from a combination of private and public sources. University officials estimate the cancer center will create 1,200 high-paying jobs and provide a significant boost to the Omaha economy. Douglas County, which includes Omaha, has also pledged $5 million for the Omaha-based project over a decade. Heineman supports the project and approved the state funding earlier this year, but said he opposes the use of local tax dollars.

He criticized the Omaha proposal this week as a form of "double taxation" on smokers, because the project is already receiving $50 million in state money. But Gray noted that gasoline, property and other items are often taxed multiple times by state, city and county governments. "Take gasoline, for example," he said. "The feds tax it. States tax it. Some municipalities tax it. Is that a double tax, or a quadruple tax? I don't get what the governor means when he says this is a double tax. I don't understand that logic."

The proposal would affect more than 500 grocers and retailers in Omaha, according to the Nebraska Grocery Industry Association. Kathy Siefken, the group's executive director, said her member businesses are contacting council members in hopes of swinging the vote against the ordinance. She said petition circulators collected nearly 10,000 signatures against it in one week, but she noted the group hasn't had much time to mobilize against it. "It's a great project, and not one person is going to say it is not a good idea," Siefken said. "Everybody's going to benefit from this project, and people are excited about it. But you could lose a lot of that momentum when you start putting independent business people out of business."