New facts emerge in tobacco tax debate

This year’s version of a perennial legislative battle over the state tax on cigarettes will be waged with a new set of facts and figures thanks to a study just completed by the Utah Tax Review Commission.

Addressing questions posed by the Legislature’s Revenue and Taxation Interim Committee, the panel released results Thursday that found that while raising the current rate of 69.5 cents levied on a pack of smokes could add tens of millions to state coffers, the tax would target a narrow base of taxpayers, is regressive in nature and squeezes dollars from those saddled with an addiction.

Commission member Janis Dubno took some issue with the study’s description of the tobacco tax as “imposed on a behavior that is addictive” and asked that a caveat be added that noted buying cigarettes is a discretionary act.

Sen. Wayne Niederhauser, R-Sandy, also sits on the board and countered that once a person is hooked on tobacco, supporting the habit is no longer an act of choice.

“I know some people … they would kill to get a cigarette,” he said. “It is so addictive, it’s horrible … I guess there’s some argument on whether it’s discretionary or not.”

The panel’s report cites numerous studies that claim a link between the urge to smoke and the price of cigarettes — when costs go up, tobacco use goes down. However, the information was qualified by the recognition that many factors contribute to the habits of smokers, and the study noted, “we cannot precisely determine the extent or strength of the relationship between price and demand for cigarettes and other tobacco products.”

While the number of smokers in Utah has been on a fairly steady decline since the late ’70s, revenues collected on tobacco sales have, thanks to regular tax bumps, steadily grown. In fiscal 2008, the state collected some $62 million in tobacco taxes with about $54 million of that coming from cigarette sales.

The most recent attempt by lawmakers to grow that revenue was a bill in the 2009 Legislature proposing a $2 levy per pack that would have garnered an additional $50 million. That windfall that might look especially attractive in the upcoming legislative session when lawmakers will likely focus on solving an expected $700 million revenue shortfall. Revenues, however, represent only one aspect in the debate over tobacco taxes.

Another legislator on the commission, Sen. Lyle Hillyard, R-Logan, said income is a secondary concern on an issue that has such a direct impact on public health.

“I personally never looked at the cigarette tax as a revenue issue,” he said. “But as a health issue. If doing this will help stop smoking, it’ll be worth it to me.”

That argument was posed during legislative debate on the tobacco tax bill earlier this year, but countered by contentions that hiking the cigarette tax would have negative consequences on businesses that rely on tobacco sales, a stance that carried a lot of weight in the throes of last winter’s economic slide. Lawmakers tabled the bill after several modifications failed to find favor.

While the commission’s study offered no conclusions, the evidence presented is likely to provide fodder on both sides of an issue that will be before legislators again in January.

“Things that have come up today … and the tobacco tax, will be debated this year,” Niederhauser said.

© Copyright: Deseretnews

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