Moak: Tax increase on cigarettes not cure all

Published 5:00 am Wednesday, April 29, 2009

A potential increase in the state’s excise tax on cigarettes isexpected to generate around $8 million monthly and $96 million peryear, but the true totals won’t be known until after a year of thetax’s implementation, a local legislator said.

District 53 Rep. Bobby Moak, D-Bogue Chitto – one of six Houseand Senate conferees who negotiated the 50-cent increase Tuesday -said the new 68-cent per pack tax on cigarettes would not be a”cure all” for the multi-million dollar shortfall in the statebudget. However, his hopes are that the tax will decrease thenumber of smokers in the state and save money on Medicaidexpenditures in the long run.

The negotiated tax will go before the House and Senate forapproval shortly after legislators rejoin a recessed session May 6.Moak expects the legislation to pass and go into effect May 15.

“This is not a tax to cure the budgetary woes of the state – itsimply will not do that,” Moak said. “But we had testimony thatsimply by stopping someone from smoking you can see the healthbenefits within a 30-day period in some cases. We could seeimmediate help to the Medicaid system.”

Moak said conferees listened to testimony from health officialswho said every pack of cigarettes smoked in Mississippi coststaxpayers $10 for treatment of smoking-related diseases. He said 25percent of Mississippians smoke, and 37 percent of the state’sapproximately 600,000 Medicaid recipients smoke.

“When we sell a pack of cigarettes for 18 cents and it costs ourmedical system $10, we’re losing money,” Moak said.

If House Bill 364 – the negotiated cigarette tax legislation -is passed by the Legislature next week, a portion of the proceedswill go toward a smoking cessation program headquartered atUniversity of Mississippi Medical Center and operated at hospitalsaround the state, Moak said. He said the Legislature appropriated$3 million to the program before recessing on April 1 and hopes toadd a further $1 million next month.

Moak said revenue from the new tax would not be earmarked forthe state’s car tag rebate program, but money from the general fundhas already been set aside to plug the program’s $25 millionshortfall. He said reports that the tax would fund the car tagprogram are misconceptions.

“The Legislature is going to take care of the car tag issue,”Moak said. “Beginning July 1, we are making diversion (from casualsales taxes). But earmarking dollars from the cigarette tax for cartags? No.”

After more than a month of failed negotiations, Moak said Houseand Senate conferees were able to reach a compromise Tuesdaybecause the legislators simply “wore down politically.” The Housebegan negotiations at $1 per pack and were holding firm at 75 centsbefore the compromise, while the Senate began at 49 cents andformerly refused to come up from 64 cents.

“The House conferees, when we met way back when we started thisprocess … said, ‘Look, we can live with 68 or 69 cents and if weget to that number, that’s where we need to be,'” Moak said. “Wefelt that was a number that would be attainable. The Senate, Ithink, had to work through more than that – they had to workthrough their leadership and make sure the governor’s position wassolid. They had a few more hurdles to overcome than [the House]did.”

Moak said the 68-cent cigarette tax puts Mississippi alongsideits neighboring states, which either have steeper taxes in place orare discussing them in their own legislative sessions.