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Tobacco tax increase is in the works

Opponents say higher tax rates on tobacco won’t stop the state’s smokers.
Hideaway employee Beth Ludvik works behind the counter Tuesday, Feb. 19, 2013, in Dinkytown.
Image by Bridget Bennett
Hideaway employee Beth Ludvik works behind the counter Tuesday, Feb. 19, 2013, in Dinkytown.

State legislators want to substantially increase the state’s tax on cigarettes and other tobacco products to prevent smoking and generate revenue.

Last month, Gov. Mark Dayton proposed raising Minnesota’s cigarette tax 94 cents and some legislators hope to raise it as much as a $1.60, making it one of the highest in the nation.

Health proponents say the increases could help curb smoking while opponents argue tobacco addictions are stronger than a tax increase.

Rep. Diane Loeffler, DFL-Minneapolis and vice-chair of the state House Taxes Committee, said she supports fellow DFL-er Rep. Ann Lenczewski’s $1.60 tax hike because of its potential two-fold benefits.

“We’ve got a really tough budget,” she said. “It seems like this is one of the revenue sources that accomplishes good policy goals [like smoking prevention] and helps us deal with our financial problems at the same time.”

Dayton’s revamp of the state’s tobacco tax is predicted to generate about $370 million over two years, according to Minnesota Management and Budget.

Even with higher prices, addicted smokers won’t stop spending money on cigarettes, said Kim Crockett, vice president of the Center of the American Experiment, a conservative advocacy organization in Minneapolis.

“They are expensive now, and I still buy them,” said University of Minnesota graduate Mandy Grootwassink. “Smokers, we don’t really think about the long-term effects even though we are aware of them. We still buy cigarettes.”

Harry Lando, University professor of epidemiology and community health, agreed but said the cigarette tax could prevent teens from starting the habit.

“They are starting lifelong habits that they will increasingly regret as the health impacts show up later in their lives,” Loefller said. “It’s proven that this is the best way to stop kids — they’re very price-sensitive.”

Kaila Narum, a senior in marketing and entrepreneurial management, said she supports the bill because smoking causes preventable deaths and illnesses.

She is an officer for the University’s Colleges Against Cancer student group.

“We’re hoping to stop people from starting in the first place,” Narum said. “You’re not choosing to pay the tax; you can cut down on smoking.”

Narum’s father died seven years ago from cancer partly caused by his smoking habit.

“If you have a business model that kills almost half of its users, you should come up with a different business model,” she said.

About 19 percent of Minnesotans over the age of 18 smoke cigarettes, making the state the 11th lowest in usage throughout the nation, according to a 2011 report from the Centers for Disease Control and Prevention.

Lando, who specializes in reducing global tobacco use, said he would like the money from the cigarette tax to be put toward services for quitting or promoting smoking prevention.

“I think there is an ethical question as far as continuing to get all this revenue from smokers and then not essentially giving anything back to them in terms of increased services,” he said.

 Crockett said that by making cigarettes “essentially unaffordable,” consumers might travel across state boarders or start “smuggling” tobacco.

 “Raising the price or making it more intangible to get will not make people quit,” Grootwassink said. “Just think about other drugs or other things that are illegal, people still get it. If people want it, they will find a way.”

Crockett also said the tax proposal would target middle- and lower-class Minnesotans.

“I hate to think we’re balancing the state budget on the backs of people who, frankly, need to put food on the table and pay their rent,” she said.

But Narum said raising the cigarette tax would even the playing field for the state’s smokers and non-smokers.

“Yes, you are paying a little bit more for your pack of cigarettes, but overall, we as a state are paying for your health insurance and coverage,” Narum said.

According to a report from the American Cancer Society, Minnesota spends about $2.9 billion a year on smoking-related health care costs.

That averages to be $554 spent for every person and child in the state, the report said.

“Being overweight is also unhealthy, so is eating candy and drinking too much wine,” Crockett said. “Are we going to tax those things?”

Loeffler said it might be a burden on smokers, but lawmakers are attempting to find sources of revenue with the most benefit.

She said she is leaning more toward the higher tax rate over Dayton’s lower proposal.

A bill, authored by Sen. Scott Dibble, DFL-Minneapolis, and others, mirrors Lenczewski’s and will be discussed as well.

Legislators will finalize taxing decisions later in the session after the second biennial budget forecast.

The tax increase on cigarettes would go into effect this summer if the legislation is approved.

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