Kansas Health Institute | Information For Policy Makers. Health for Kansans.

TOPEKA — The Senate Tax Committee will hold three days of hearings on Gov. Mark Parkinson’s tax proposals, including one to increase the levy on tobacco sales.

Parkinson in January proposed raising tobacco taxes along with a three-year, 1-cent general sales tax increase. The new taxes would help resolve a budget deficit that continues to grow.

Legislators have said the tobacco tax is among the most likely to pass but have not debated the measure in either chamber.

Sen. Les Donovan, R-Wichita, the committee’s chairman, said he intended to hold hearings on the bills March 9, 10 and 11.

“I don’t know what will happen,” he said. “We need money.”

According to state budget officials, a 55-cent cigarette tax increase and an increase in the state’s tobacco products tax from 10 percent to 40 percent would bring in about $70 million a year.

New Website

The state’s leading anti-tax group has launched a new Web site arguing against an increase in the tobacco tax.

Americans For Prosperity-Kansas this week launched www.stopthewaronsmokers.com, which describes the concerns many conservatives have voiced about cigarette and tobacco taxes.

Among those arguments is that tobacco taxes are an unstable revenue source and that Kansans will avoid paying the new tax by shopping in other states including Missouri, which has among the nation’s lowest tobacco tax rates.

“In looking at our state’s history with cigarette taxes, it is apparent raising these taxes does not serve as a deterrent from smoking,” said AFP-Kansas State Director Derrick Sontag, in a prepared statement. “It also makes little sense to try to raise revenues from cigarettes when just last week the Kansas Legislature approved a ban on smoking in public places.”

Little cigar tax bill killed

A vote last week by the Kansas Senate showed that legislators aren’t yet ready to tackle the tobacco tax issue, said Anne Spiess, a spokeswoman for the American Cancer Society.

The Senate killed Senate Bill 478, which would have classified “little cigars” as cigarettes. The cigars are the size of a cigarette and frequently sold as cigarettes. But because they are wrapped in tobacco and not paper, they are classified as “other tobacco products” and taxed accordingly.

The Kansas cigarette tax is currently 79 cents per pack, while other tobacco products – including snuff, cigars, and snus – are taxed at 10 percent of the average wholesale product price.

The Department of Revenue had requested the bill, which was passed by the Senate Federal and State Affairs Committee. But the bill was rejected on the Senate floor, 18-21.

“It was a prediction that the Republican-led Legislature is not going to be thrilled to see something coming from the Democrat administration that would lead to a change in taxation on a product like that,” Spiess said.

But anti-smoking advocates continue to tell legislators that any increase in the tax on tobacco products will provide lasting health benefits that will save the state money in the long run. The state Medicaid program spends millions of dollars each year treating sick smokers

Some decline expected

For every 10 percent increase in the cost of a pack of cigarettes, economists estimate that 3 to 4 percent of smokers will quit.

Tax opponents say those decreases mean a potential decline in revenue. But public health officials and anti-smoking advocates say those decreases spell reduced state health care costs in the future.

“It depends on which basket of apples you’re looking at,” said Mary Jayne Hellebust, executive director of the Tobacco Free Kansas Coalition. “Maybe some of that money goes away (in the short term) but you also have to look at what you’re saving in the other basket, in terms of reducing health expenditures.”

According to state officials, smoking leads to $930 million each year in total Kansas health care costs, including $196 million within the state’s Medicaid program.

And, Hellebust said, any drop in revenue could be handled in later years by increasing the tax even more.

“Unfortunately, because it’s such an addictive product, some people are still going to keep using it,” she said. “That revenue is going to continue coming in at a higher rate.”

Kansas last raised its cigarette tax in 2002. Because it can take several years for a state to reconsider its tax rate, the national anti-tobacco group Campaign for Tobacco Free Kids advocates that states raise taxes by at least $1 per pack each time, Hellebust said.

In 2002, before the last tobacco tax increase took effect, the tax brought in about $48 million. In 2008, the tax brought in more than $112 million.

Still too early?

“I think as we get closer to wrapping up the session and the Legislature is trying to figure out the final fiscal scenario, the tobacco tax will look more and more like an option that’s workable,” Spiess said.

Advocates continue to ask that funds raised from a tobacco tax increase go back into tobacco control and prevention programs, Spiess said. In recent years, about $1 million has been spent on those efforts, mostly through local chronic disease prevention grants.

“We would like to see a tax be passed, but also to have it earmarked for health care – something targeted to help smokers quit smoking,” she said. “It’s an uphill job for us to get the tax considered by the Legislature, but it’s also tough to get that earmarked for these programs.”