The state House and Senate health committees are considering bills that would increase the tax on a pack of cigarettes by $1, and a fight is already brewing over how to spend that new revenue.
It’s not clear if there are enough votes in either chamber to pass the tax — especially in what’s now an election year — but lawmakers and lobbyists are eyeing how to spend the $120 million to $160 million a year the tax would bring.
The proposal would raise the tax on a pack of cigarettes from 55 cents to $1.55. It would also raise the tax on wholesale smokeless tobacco products from 7 percent to 50 percent.
Lawmakers want to see at least some of the money used to fix health care problems — though there is debate over what exactly problems it should go toward. And others want to see the new money go to paying down long-term debts.
There is also some pressure, likely from industry representatives, to phase the tax in over several years.
Of particular note is the divided mind of Senate Finance Chairman Roman Prezioso, D-Marion.
In his previous role as chairman of the Senate Health and Human Resources Committee, Prezioso was a major backer of increasing tobacco taxes. But this year, as finance chairman, he said he’s torn by a new set of pressures.
“My world just got a little bigger,” he said.
“The question is, first of all, ‘Do we have the votes to get it through the Senate?’ ” Prezioso said.
“If there isn’t (interest) I’m not going to put people through the agony of trying to debate an issue that we know isn’t going to pass,” he said.
Beyond that, he has a list of pros and cons.
On one hand, increasing the tax inevitably decreases the number of tobacco users and provides a stable revenue stream for the state. Even though some chewers and smokers will quit, the higher tax will still generate tens of millions in additional revenue from those who are so addicted they’ll put up with almost anything.
On the other hand, the state is expected to have a $240 million surplus at the end of the year — a quarter billion more in expected revenue than officials had projected.
It might be hard to justify a tax increase of any kind under those conditions.
“People say, ‘Why are doing this while we have money?’ ” Prezioso said.
The new chairman of the Senate health committee, Sen. Ron Stollings, D-Boone, said he wants to see the tobacco tax pass and for the money to go to medical care.
“You could take bold new stabs at public health issues,” he said.
Stollings, a doctor, said tobacco tax money could be used to provide much needed dental care for the state’s poor, to help deal with the massive budget holes expected in the state Medicaid program in coming years, or even to help pay down the state’s multi-billion health insurance liability for retiring workers over the next three decades.
Stollings said if the state doesn’t spend the money now in preventative care, it will end up paying it later anyway.
Prezioso said there’s a “debate within a debate” over how to spend the money.
The bill sets aside half the revenue to go to health care-related expenses and provides about $27 million specifically for smoking cessation programs. But the vagueness on how the rest of the money will be spent has provided an opening for interest groups.
The House Health and Human Resources Committee was set to consider the tax bill during a regular committee meeting Wednesday afternoon. But one lobbyist asked the committee to hold a public hearing on the bill so one of his clients could make their case at the hearing for some of the money to go their way.
The lobbyist, Tom Susman, represents the West Virginia Behavioral Health Care Providers Association. The group of community health care providers could use more money to help provide care for drug abusers.
“We don’t have an infrastructure in this state that is necessary to take care of the issues we have,” Susman said. “You can’t lock everybody up, you can’t build enough jails.”
The public hearing will likely occur in the middle of next week. The Coalition for a Tobacco-Free West Virginia also asked for a hearing to draw attention to their issues.
House Health and Human Resources Committee Chairman Don Perdue, D-Wayne, acknowledged there was infighting over how to spend the money from the would-be tax. It “changes probably daily,” he said.
“The first thing we have to establish is, ‘Can it pass?’ ” he said.
Its chances could hinge in part on what coalition forms to support the bill and who gets what money. At the top of the food chain, acting Gov. Earl Ray Tomblin has said he does not plan to raise taxes, though a spokesman could not immediately comment Wednesday evening about the cigarette tax.
One group that opposes the tax outright is the West Virginia Wholesalers Association.
John Hodges, the executive director, said his group opposes any kind of new tax because it could hurt business and drive customers to other states.
“People will travel to buy cigarettes or smokeless tobacco, either one, to save that kind of money,” he said.
State cigarette taxes are lower in Kentucky, where they are currently 60 cents per pack, and Virginia, where taxes are at 30 cents per pack, though local governments also tax in Virginia. The taxes are higher in Maryland, where they are $2; Pennsylvania, at $1.60; and, currently, Ohio, where the tax is $1.25.
Prezioso said $1.55 a pack seems to be the “tipping point” — just high enough to make some quit but low enough to make sure everybody doesn’t quit. If they did, the state would end up losing money, at least in the short term.
“It really sounds hypocritical — that you’re raising taxes to procure dollars as a health issue but you’re doing it to raise dollars,” he said.
Prezioso added, “The real deal would be to raise it to $3 and make people quit smoking — but you’re not making any money.”
Contact writer Ry Rivard at ry.
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