An increase in cigarette tax could show up in governor’s budget
Smokers, who are about to see a big increase in federal cigarette taxes, might also end up paying another quarter or More per pack in state taxes under Gov. Jim Doyle’s budget to be released Tuesday.
The success of last year’s $1-per-pack state tax increase at stopping smoking and pressure to close the state’s $5.7 billion budget shortfall make another increase likely, supporters and critics of the idea agreed. “I’m a believer in the fact that the More disincentives we have, the More we reduce smoking, and we also save a lot of money on health-care costs,” said Rep. Mark Pocan, D-Madison, co-chairman of the Legislature’s powerful budget committee. “I’d certainly not be surprised if we continue down that path.” The possible increase is one of several taxes — including a $393 million assessment on oil companies proposed last year by Doyle’s Department of Transportation — that both Democrats and Republicans expect in the governor’s budget. Doyle has not publicly committed to a new state cigarette hike, though he is still pursuing a statewide smoking ban in workplaces such as bars and restaurants. But the Democratic governor has touted the fact that, after Wisconsin raised its cigarette tax by $1 to $1.77 per pack in January 2008 and offered new state assistance to help smokers kick the habit, smokers flooded the state’s tobacco quit line last year. “We’ve seen a lot of people making an effort to quit and being successful,” Doyle spokesman Lee Sensenbrenner said. That increase also doubled state tax collections on Cigarettes in the first 11 months of last year compared with the same period in 2007, to $543.2 million, according to the Legislature’s budget office. And as More people quit, the state stands to cut down on the estimated $480 million in smoking-related health-care costs, anti-smoking advocates said. Still some oppose raising cigarette taxes in the current economic downtown. Assembly Minority Leader Jeff Fitzgerald, R-Horicon, voted for the $1 state increase as part of the 2007-09 budget. But Fitzgerald said another increase couldn’t be justified now. “These are different times,” Fitzgerald said. “We’re in much worse economic times and you’re still trying to solve things with a tax.” Push to quit On April 1, the federal cigarette tax rises from 39 cents per pack to $1 as part of an expansion of public health-care benefits for poor and working-class families. Since December, Doyle has been pointing out that two years ago he sought a $1.25 increase in the cigarette tax and had to compromise with Republican lawmakers for the $1 increase that became law — in effect leaving a quarter on the table. Doyle also has argued that cigarette tax increases should be large enough to push smokers to quit. Along with the federal hike of 61 cents, a possible 25-cent state increase would add 86 cents to the total cost of a pack of Cigarettes in the state — well above the 10 percent increase in the price per pack that advocates say is enough to significantly cut smoking. Those increases would bring the total state and federal cigarette taxes on a single pack to $3.02, or well More than half the current average price per pack in Wisconsin of $5.01. A 25-cent or More state increase also would leave Wisconsin’s tax higher than that of any of its neighbors. Raising the cigarette tax won’t win any applause from smoker Fred Boersma of Madison. “They’ve got taxes up so high right now, it’s pathetic,” Boersma said. “It’s already $42 a carton” for Cigarettes. Risk of tax hike Boersma said he’d keep smoking in spite of the increases. But other smokers may see the higher prices as a reason to quit or at least cut back. The number of packs sold in Wisconsin dropped by nearly 18 percent in the first 11 months of last year, according to the Legislature’s budget office — although some of that drop could be due to smokers buying Cigarettes in other states or on the Internet to avoid Wisconsin’s higher taxes. The federal cigarette tax increase is expected to drive down cigarette consumption by 4.4 percent even without state action, meaning Wisconsin’s cigarette tax revenues could fall by $56.3 million by June 2011, the Legislative Fiscal Bureau said last week. Those decreases delight Maureen Busalacchi, executive director of Smoke Free Wisconsin. But to keep that up, Busalacchi said it’s important for the state not to slash its programs to help people quit smoking to help balance the budget. Bill Phelps, a spokesman for the parent company of cigarette maker Phillip Morris USA, said that relying on declining cigarette tax collections to fund key state programs such as health care will lead to financial troubles for Wisconsin down the road. In a December interview with the State Journal, Doyle acknowledged that risk and said that any further state tax increases should be done to help stop smoking and not to balance the state budget.