cigarette tax hike passes finance

On Tuesday afternoon, the Senate Finance Committee met to debate H. 3567, or cigarette tax bill. The bill was amended to call for a 7¢ to 57¢ per pack cigarette tax increase. All of the revenue will go towards Medicaid. I could not in good conscience vote for this plan for several reasons. First, it increases the number of people dependent on government welfare rolls. It is funded by unreliable funds. It only exacerbates the problem of healthcare costs. It depends on matching funds from the Federal Government. What if these matching funds cease to exist or are decreased? We’d have to remove citizens from the benefits or increase taxes. Neither are pleasant.
There were several amendments introduced that I did support, but so far, these efforts have failed.
The subcommittee chaired by Sen. Thomas Alexander reported out a good starting point. The subcommittee worked with an organization called the Covering Carolina Collaborative, a committee made up of insurance companies, the SC Hospital Association, the SC Chamber of Commerce and others.
The subcommittee’s plan calls for an increase from 7¢ to 57¢ per pack cigarettes taxes. This increase would generate approximately $160 million. This money would go into a pool called the “Insure SC Trust Fund”. This fund will be allocated to individuals that purchase health insurance in the form of income tax credits.
The interest from this fund will be used in a special account called the “Smoking Prevention and Cessation Trust Fund”, which is obviously for smoking prevention education. The interest should accumulate about $5 million. I voted in favor of this amendment for the simple reason it is much better than the bill the House sent us.
There are shortfalls with the plan, however. One is that the tax credits only go to individuals not receiving healthcare currently. In other words, we’re punishing the employers that are currently providing health insurance.
Also, I’m convinced that HSA’s (health saving accounts) are the only concept that will actually curb healthcare costs. The CCC plan isn’t clear as to if the tax credit can be placed in an HSA.
Sen. John Courson will be introducing an amendment on the floor that will be my favorite plan, but getting the votes will be tough. His amendment will be short and simple. Raise cigarette taxes to 57¢ and give an income tax cut. Let the taxpayer decide how he or she will spend the money. Simple enough?