Cigarette tax hike? Idea is smoldering back to life in Legislature
After their bid for a tobacco tax hike went up in smoke last session, crusaders for the cause are coming back again, confident that Utahns will soon be paying more for their cigarette fix.
"It's 100 percent," said Sen. Allen Christensen, R-North Ogden, who has unsuccessfully sponsored the bill for the past several years.
Christensen said he plans to push to raise the 69.5-cent per-pack tax up to $2. It would make Utah's tax on par with Arizona's and give the state the 11th-highest cigarette tax in the country. Earlier this year, Congress raised the federal cigarette tax 62 cents per pack to $1.01.
Advocates for the tobacco tax hike, like the American Cancer Society and American Heart Association, hope the higher tax would motivate 3,000 teens and 10,000 adult smokers to kick the habit and thousands more to never pick up the habit.
The tobacco companies and Utah Food Industry Association have argued that a higher Utah tax would just force sales into neighboring states or onto Indian reservations or military bases.
Utah already has the lowest rate of smokers in the country, and its cigarette sales have been falling since the 1980s, meaning it could be a diminishing source of revenue.
Legislative leaders said earlier this year that a tobacco tax increase was likely.
"I think it will happen," Senate President Michael Waddoups, R-Taylorsville, said in May. "The question is the amount. Will it be a buck? Will it be more?"
The estimated $76 million the tobacco tax increase could generate could help cover part of the state's budget shortfall, Waddoups said. The state is expected to have a budget shortfall as high as $850 million.
But it may be premature to start counting those tobacco dollars just yet.
While supporters had former Gov. Jon Huntsman Jr.'s support for a tobacco tax increase last year, Gov. Gary Herbert says he won't recommend a tobacco tax hike in his budget proposal due out in December.
"I'm not proposing or pushing any tax increases," he said in an interview last week.
And now legislative leaders are waffling on their seeming endorsement of the tobacco tax hike.
It boils down to a well-choreographed dance: Herbert won't propose a tax hike, passing the buck to the Legislature. The Legislature, calling Herbert's bluff, is challenging him to show how he will balance the budget without gutting state programs.
Waddoups said this week that he has told the governor he will support him in trying to pass a budget without new taxes, but the tobacco tax remains an option if legislators can't get the budget balanced.
If it comes to that, the tobacco tax battle will likely draw another swarm of lobbying from big tobacco companies and could pit members of the dominant Republican Party against each other.
House Majority Leader Kevin Garn, R-Layton, says tax hikes may be a nonstarter next year.
"I don't think anyone is eager to raise taxes right now in this environment we're in," said Garn. "I think we'd have a tough time raising taxes in the economy we're in right now. ... I don't think there's a lot of support for it."
And leading conservative legislators say they will fight any effort to increase the tobacco tax.
"As I've discussed this budget with my conservative colleagues, we have pretty much been in agreement that now is probably the worst time to consider tax increases when we're hoping to see this economy recover," said Rep. Greg Hughes, R-Draper, co-chairman of the House Conservative Caucus, which includes about 30 House members.
He said there is also concern that allowing a tobacco tax increase could open the door to other "sin taxes" such as soda and fatty food. Hughes said that between the cuts made last year and use of at least half of the $518 million held back in the state's Rainy Day Fund and Education Growth Fund, the budget can be balanced without a tax hike.
House Speaker David Clark, R-Santa Clara, suggested last session that the tobacco tax be kept in reserve in case it's needed in the coming year, and he thinks it might prove to be useful.
"As the financial pressure builds on the state more and more, I think that improves the likelihood of [the tobacco tax] passing," Clark said. "As the pain of the cuts become closer to reality, there may be more of an appetite to look at some of those revenue enhancements and tobacco has been one of them."
Tobacco taxes per pack in Rocky Mountain states:
New Mexico: 91 cents
Colorado: 84 cents
Nevada: 80 cents
Utah: 69.5 cents*
Wyoming: 60 cents
Idaho: 57 cents
* Utah has the 36th-highest tobacco tax in the nation.
Source: Cancer Action Network