Combine tobacco tax hike with effort to get rid of low-cost cigarettes

Missouri hospital executives who lost a long-simmering lawsuit against tobacco companies last month shouldn’t fret over the potential loss of more than $455 million in civil damages.

A better method exists to collect that revenue, and if the hospitals are smart about it, they’ll make the tobacco companies their partners, not their enemies.

It is time for the state of Missouri to get serious about raising its lowest-in-the-nation tobacco tax. The path to victory will require a partnership that might make both sides uncomfortable.

As the legislative session winds down this week, there are two proposals unlikely to pass that should be combined into a ballot initiative in the near future to raise needed revenue for the state while cutting down on tobacco use and improving the health of Missourians.

Both results would be good for the hospitals stinging from their losses in City of St. Louis v. American Tobacco, which took 13 years to litigate before verdicts came down April 29 favoring the tobacco companies.

Tobacco taxes should have been raised long ago, but the Legislature won’t consider the idea, even though the state desperately needs revenue and even though Missouri’s 17-cents-per-pack tax is shamefully below the national average of $1.45 per pack.

Tobacco tax increases have failed on the statewide ballot twice in the past decade. They were close votes, but in one case, proponents sealed their fate by earmarking the funds — a process voters don’t trust. In the other case, proponents tried to place the increased tax in the state constitution, where it doesn’t belong.

For a tobacco tax hike to escape heavy opposition from tobacco companies and their supporters, it should be combined with a provision that would end Missouri’s status as the nation’s dumping ground for low-cost cigarettes.

In 1998, when most states in the nation entered into an agreement with the major tobacco companies to settle lawsuits over misleading marketing, the settlement left a loophole that allowed small tobacco companies that weren’t parties to the agreement to flood the market with lower-cost products.

Except for Missouri, every state that is part of that agreement has fixed that loophole. The result is that Missouri has the fifth-highest smoking rate in the nation, which results from its low tax and low prices.

This two-pronged approach to raising the tobacco tax while ridding the state of its lowest-cost cigarettes would accomplish three positive goals:

  • Tripling Missouri’s tax would raise an additional $190 million per year and still keep the tax below every border state. Going higher is tempting, but it would invite opposition.
  • Increasing the costs of cigarettes lowers smoking rates. Various studies have shown a direct correlation between raising the price of tobacco products and reducing their use. This would make a long-term dent in the more than $2 billion spent on health care in Missouri each year as a result of the devastating effects of smoking.
  • Finally, by helping Big Tobacco to solve its unfair market competition problem, the health care groups that have been yearning for a tobacco tax increase for more than a decade can keep the major tobacco companies on the sideline in a statewide initiative campaign.

Missouri’s health-conscious voters should be given a chance to do what the anti-tax Legislature won’t even consider: Raise tobacco taxes to a reasonable level, get rid of Missouri’s status as a cigarette dumping ground and improve the chances that our next generation can grow up healthy.

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