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MO Cigarette Tax Increase 2012
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This Discussion Guide is part of Community Conversations at FOCUS St. Louis.  It is meant to initiate civil discourse around the policies that affect the St. Louis region; to hear each other’s perspective. As is the case with all public policies, this issue is complex and multi-faceted, with many stakeholders. Please keep this in mind as you discuss the proposed cigarette tax increase in your community.

Missouri Cigarette Tax Increase – 2012 Ballot

The Missouri Tobacco Tax Initiative, also known as the "Healthy Missouri Initiative Petition," will appear on the November 2012 ballot. If passed, the ballot measure would impose an additional $0.73 tax on each package of twenty cigarettes. Measure language reads:

Shall Missouri law be amended to:
  • Create the Health and Education Trust Fund with proceeds of a tax of $0.0365 per cigarette and 25% of the manufacturer's invoice price for roll-your-own tobacco and 15% for other tobacco products;
  • Use fund proceeds to reduce and prevent tobacco use and for elementary, secondary, college, and university public school funding; and
  • Increase the amount that certain tobacco product manufacturers must maintain in their escrow accounts, to pay judgments or settlements, before any funds in escrow can be refunded to the tobacco product manufacturer and create bonding requirements for these manufacturers?

The proposal from Show-Me a Brighter Future, a coalition led by the American Cancer Society, is estimated to generate from $283 million to $423 million annually. Half the money would be used for public school programs, 30 percent would go to higher education and 20 percent would support smoking cessation programs.

Background:

Missouri has the lowest cigarette tax in the nation at 17 cents per pack.  The state also has the 11th-highest smoking rate in the U.S., according to Show-Me a Brighter Future, proponents of the tax increase. The eight states that border Missouri have an average tax rate of one dollar per pack. If voters approve the measure, the tax on cigarettes in Missouri will exceed the tax rate in all but two of the states bordering Missouri.

The measure has two aims, according to Misty Snodgrass, director of governmental affairs for the American Cancer Society. The most important reason is to increase the price of cigarettes so fewer young people start smoking. The other is to provide a stable source of revenue for the targeted programs. 

According to the Department of Health and Senior Services:
  • More than 9,300 Missourians died annually in 2005-2007 from tobacco-related diseases;
  • Secondhand smoke causes an average of 1,180 deaths in our state each year;
  • Lost productivity in 2005-2007 was figured at $2.6 billion; and
  • Every Missouri household pays $585 in U.S. and state tax dollars from expenditures due to smoking.
While increasing cigarette taxes might appear to be a simple way to raise revenue, opponents argue that it can backfire and may even cause a loss in net cigarette sales. St. Louis and Kansas City, Missouri’s two largest metropolitan areas, both border states with much higher cigarette taxes; therefore residents of Illinois and Kansas are prompted to make their purchases in Missouri.
 
Supporters of the ballot measure argue that, even if applied only to off-brand cigarettes, the tax increase will cause many people to quit smoking, thus improving public health in Missouri. Supporters also contend that the potential lost revenue is overstated by opponents of the tax measure.
 
Who else is involved with this issue?

The Missouri Budget Project and Show-Me a Brighter Future, led by The American Cancer Society, favor the tax increase.  The most prominent organization in the St. Louis region that is opposed to the tax proposal is The Show-Me Institute.
 
Three Possible Perspectives:

Person A is in favor of the tax increase, believing that Missouri’s cigarette tax is far too low.  The state’s budget could use the money as could the educational and cessation programs. Missourians’ health could use the help as well, as the Department of Health and Senior Services points out.
 
Person B does not support the cigarette tax increase, particularly during difficult economic times.  As a general rule, government does not spend money wisely, and any proposal that increases the size of government ought to be opposed.
Person C believes a tax increase is important, but believes that a $1.00/pack increase is too much. Person C would support a smaller increase on cigarette taxes that applied to all brands.

Discussion Questions:
  1. Which of the three people in this scenario do you most closely align with A, B, or C?  Why?
  2. Would the increase in cigarette taxes really keep younger people from smoking, as intended?
  3. Is this a proper role for government, in essence determining who can smoke merely by increasing the tax on cigarettes?
  4. Should health care costs – especially for low-income Missourians –influence this issue?
Links for further reading:
  1. February 14, 2011 Show-Me Institute  commentary: 'Sinful' Tax Collections Won’t Fix Budget Woes in Missouri.
  2. June 27, 2011 CBS article: Missouri Contemplates New Tobacco Tax
  3. August 4, 2011 Show-Me Institute  commentary/video: Gas, Booze, and Cigs: How Lower Tax Rates Make Money for Missouri.
  4. April 25, 2012 Show-Me Institute commentary: Why a Whopping Increase in Missouri's Cigarette Tax Is a Bad Idea.
  5. March 6, 2012 Campaign for Tobacco-Free Kids Fact Sheet.
  6. May 4, 2012 Kansas City Business Journal article: Health care group aims for surge in Missouri cigarette tax.
  7. May 6, 2012 Kansas City Star Midwest Democracy article: Petitions submitted for tobacco tax increase in Missouri.
  8. May 5, 2012 News-Leader.com article: Tobacco tax hike needed in Missouri.
  9. May 5, 2012 Columbia Daily Tribune article: Cigarette tax supporters turn in signatures.
  10. June 25, 2012 Daily Herald article: Illinois Cigarette Tax Increases $1 a Pack
  11. Ballotpedia: Missouri Tobacco Tax Initiative (2012).
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