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Jan. 29, 2013
TOPEKA After being briefed today on Kansas' tobacco taxes and sales enforcement, legislators asked whether the state was doing enough to discourage smoking, particularly among children.
Walt Schoemaker, deputy director of the state's Alcoholic Beverage Control unit at the Department of Revenue, which also regulates tobacco sales, told members of the House Federal and State Affairs Committee that Kansas has about 2,500 retailers licensed to sell cigarettes and that there are 11 tobacco tax and sales enforcement inspectors statewide.
Schoemaker said his unit performed 3,083 controlled buys in 2012 to check for sales to people under the age of 18. Of those, 166 turned up violations resulting in penalties to the sellers. That put Kansas retailers at a 95 percent compliance rate.
The state collected $129,000 in penalties, an average of $777 per violation. $1,000 is the maximum penalty.
Schoemaker said one license was suspended for three months for repeat violations but no licenses had been revoked for repeat violations.
Rep. Larry Campbell, R-Olathe, congratulated ABC unit for helping bring the compliance rate up to 95 percent last year, up from 62 percent in 2005. But he said 5 percent non-compliance still was too high.
"The compliance percentage is a little bit deceiving," Campbell said. "There are about 130 million sales on these type of products. Five percent of 130 million means that 6 or 7 million times we could be selling to minors."
Rep. Steve Brunk, R-Wichita, asked Schoemaker whether the penalties were tough enough to further reduce sales to minors.
Schoemaker said the penalties for sales to youngsters typically were $500 for a first offense, $750 for a second, and $1,000 for a third. A $1,000 fine plus a license suspension is the standard penalty for a fourth offense. A fifth offense usually results in a license revocation.
"Do we need to increase the fines?" asked Brunk. "Or move up the (license) revocation a little quicker rather than give them so many opportunities?"
"I think that would get their attention," Schoemaker said. "But I think right now we're pretty effective. We have very few suspensions because a lot of these people are mom-and-pop stores, small stores — if we fine them first $500 and then $750, it really starts to get their attention."
Brunk asked whether the clerk making the sale also was fined.
"They are subject to a local criminal fine, and that's up to local law enforcement if they are interested in that. Some do, some do not," Schoemaker said. "The root of the problem is not generally the clerk selling it, it's the management."
Kansas' tax on cigarettes is 79 cents per pack, 15th lowest in the nation. Missouri's rate is the U.S.'s lowest at 17 cents per pack. New York has the highest rate at $4.35 per pack.
In Kansas, sales of all other tobacco products are taxed at 10 percent of wholesale cost.
In fiscal 2012, the state took in $96.5 million in cigarette taxes, about the same as in 2011. It took in another $7 million in other tobacco taxes, slightly up from 2011.
"In our little world, there's a distinction between cigarettes and other tobacco products. Other tobacco products are cigars, snuff, chewing tobacco, all the new products that are coming out," said Schoemaker, noting sales of such products have been on the rise.
Committee Chair Arlen Siegfreid, R-Olathe, asked if studies had been done on whether increasing tobacco tax rates leads to reduced smoking.
"In other words, do people smoke at a higher rate in Missouri than in New York?" Siegfried asked.
Schoemaker said he was not aware of any studies, but after the meeting, Chris Masoner — government relations director for the Kansas chapter of the American Cancer Society — caught up with Siegfried in the hallway.
"There are plenty of studies that show the correlation between higher taxes and lower smoking," Masoner told Siegfreid, noting that New York City's smoking rate is under 10 percent and Kansas' rate is about 19 percent.
Kansas has not raised its tobacco tax since 2002. In 2010, then-Gov. Mark Parkinson supported raising the cigarette tax by 55 cents to $1.34 per pack, which was then the national average. But the Legislature left that tax alone while raising the general sales tax.
The state's tax on other tobacco products has been the same since 1972, said Schoemaker. Last year, a bill was introduced to raise the tax on other tobacco products, but failed to get out of a senate committee.
Schoemaker said tax receipts could be expected to increase between $1 and 2 million for each additional 1 cent tax per pack. All tobacco taxes are deposited into the state general fund.
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