I’m a proud Republican and a fiscal conservative. I’m also the lead sponsor on a bill that would raise an estimated $350 million in new state taxes and attract another billion dollars in federal health care funds to Georgia. What’s more, I’m looking forward to running for re-election this year and will campaign on this issue.
If all this sounds confusing and contradictory, let me explain. House Bill 39 would raise the state tax on cigarettes by a dollar a pack — from the current 37 cents a pack (fifth lowest in the nation) to $1.37. For a whole host of reasons, this is an idea whose time has come.
For me, the case for the so-called “buck a pack” increase rests mainly on the need to promote the good health of our citizens (by discouraging smoking) and on the issue of tax equity.
Right now Georgia’s 37-cents a pack cigarette tax generates about $237 million a year, but we spend $537 million a year treating smoking-related illnesses in Medicaid patients alone. That means Georgia’s taxpayers are subsidizing the medical costs for the smokers among us to the tune of $300 million a year. Per household, Georgians are contributing $550 a year to cover the smoking-related medical costs for the state’s Medicaid patients. Raising the cigarette tax by a buck a pack would generate at least $350 million and put the burden where it needs to be — on the smokers themselves.
Let me be clear that my purpose is not to demonize smokers. Smoking is an addiction and most of the smokers I know have tried to quit — many times. Without a doubt, the higher tax will give some enough incentive to do so. I certainly hope so. It would suit me fine if the extra dollar tax caused every smoker in the state to stop tomorrow.
Sadly, history tells us that won’t happen. The last time we raised the tobacco tax was in 2003, when we bumped it from 12 cents a pack to the current 37 cents. In 2004, Georgia’s tobacco tax revenues increased by 142 percent. Cigarette manufacturers and retailers opposing my bill warn that it will simply drive smokers across state lines to lower-tax markets, but there’s not much evidence that happens. In South Carolina, for instance, tobacco tax revenues actually declined after Georgia raised its tax in 2003.
Beyond tax equity and health care issues is the fact, of course, that Georgia is facing unprecedented budget challenges. The General Assembly is struggling now to plug a $1.1 billion hole in the state budget. The “buck a pack” tax increase on cigarettes would attract an estimated $1 billion in new federal health care funds, giving us much-needed flexibility in other areas of the budget.
Without new revenue, we’re facing truly draconian budget choices. Do we really want to lay off state patrol officers, fire prison guards and reduce the number of school days so that we can maintain Georgia’s reputation as one of the cheapest cigarette markets in the nation? Is that more important than, for instance, rebuilding a public health system that is already suffering from more than a 30 percent vacancy rate and is inadequate to handle responsibilities that range from checking diabetes and hypertension to responding to disease epidemics and terrorist attacks?
These are not scare tactics. These are the choices now on the table at the General Assembly — and before the people of Georgia.
Based on the overwhelmingly positive feedback I’ve gotten from constituents in my conservative coastal Georgia House district (including many smokers), there’s no doubt in my mind that Georgia voters understand the situation. And, as usual, the public is a little ahead of the General Assembly, but we’re catching up.
As I write this, nearly 60 House members — Republicans and Democrats alike — have signed on as sponsors for House Bill 39. In the House, we need 91 votes to pass a bill, so H.B. 39 has a pretty good head of steam. But we’re not quite there.
The next few weeks will tell the tale. Will Georgia opt for a cigarette tax that finally eliminates what amounts to a $300 million subsidy for the cigarette industry and gives us the wherewithal to get through the current fiscal crisis without further undermining the public services Georgians count on? Or will we choose to preserve the dubious honor of being the source of some of the least expensive cigarettes in the nation?
The choice is all of ours to make together. Your House and Senate members need to know what you think.
Rep.Ron Stephens represents the citizens of District 164, which includes portions of Bryan, Chatham and Liberty counties. He was elected into the House of Representatives in 1996, and is currently the chairman of the Economic Development & Tourism Committee. He also serves on the Appropriations, Rules, and Ways and Means Committees.