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Archives: KHI News Service

On January 1, 2017, the KHI News Service became part of KCUR public radio’s new initiative, the Kansas News Service. The Kansas News Service will continue to cover health policy news and broaden its scope to include education and politics. All stories produced by the former KHI News Service are archived here. Stories and photos may be republished at no cost with proper attribution and a link back to KHI.org.

Opponents of tobacco tax say it’s all about the money

Supporters say tax would improve health and bolster state revenues

By Andy Marso | March 24, 2015

Opponents of tobacco tax say it’s all about the money
Photo by Andy Marso Tuck Duncan, a lobbyist for the wine and spirits industry, used a water bottle and a bowl of jelly beans to illustrate how much those industries are taxed. Duncan joined with tobacco industry representatives Tuesday to oppose tax increases.

Representatives of the tobacco industry told senators Tuesday to ignore the health benefits of increasing the state's tobacco tax, arguing that the measure is only under consideration because of a state budget crisis.

Public health advocates turned out for Tuesday's hearing in the Senate Assessment and Taxation Committee and tried to counter that message with policy research.

Doug Mays, a former Kansas House Speaker who now lobbies for groups that include the Cigar Association of America, conceded that there might be health benefits to the tax, but suggested it would be disingenuous to pass Senate Bill 233 on those grounds.

"I don't think anyone believes that this bill is here before the committee for health reasons," Mays said. "We need money."

The state faces a projected deficit of about $700 million — more than 10 percent of the total general fund — in the upcoming fiscal year, following large income tax cuts passed in 2012.

In January, Gov. Sam Brownback proposed taxes on tobacco and liquor products to close about $100 million of that gap annually.

Altria, the parent company of Phillip Morris, has lobbied against it and continued its opposition Tuesday with a mass email sent from a group it funds, Citizens for Tobacco Rights. The email called the bill "an unjust tax that takes aim at our state's middle class."

Other opponents of the tax increases used Tuesday's hearing to paint them as a desperate government money grab.

Tuck Duncan, a lobbyist representing wine and spirits wholesalers, brought a bowl of jelly beans to represent the tax dollars legislators would be gobbling up, comparing their appetite for revenue to his granddaughter's for candy. He also poured liquid through a funnel into a clear plastic bottle to illustrate the amount of profits the industry sees consumed by federal, state and local taxes. Mays joined Duncan in the "tax on tax on tax" argument and said the bill is meant to punish Kansans for making personal choices to consume legal products.

Business owners who sell alcohol and tobacco products said that passing the bill would drive customers online or to other states, especially Missouri, which has the nation's lowest tobacco tax. They also said it was unfair for the state to attempt to balance the budget on the shoulders of them and their customers and the tax burden should be spread more evenly.

James Franko, the vice president of the Kansas Policy Institute, which pushed for the 2012 income tax reductions, said his group opposed the alcohol and tobacco taxes in part because they're "inherently regressive."

Nearly all of the opponents sought to turn senators' focus away from the potential health benefits of the bill and make it a simple question of taxing-and-spending.

"The medical side of this, we hear that and we understand that but that's not what this is about," said Tom Palace, a lobbyist for a group that represents hundreds of convenience stores throughout the state. "It's about money."

Jeff Willett, vice president for programs for the Kansas Health Foundation.

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Public health advocates argued that the proposal would aid the state budget on both the spending and the revenue side.

Jeff Willett, vice president for programs for the Kansas Health Foundation, told senators that tax increases on tobacco are proven to compel smokers to quit and non-smokers to avoid taking up the habit. The proposed $1.50-per-pack cigarette tax hike is expected to keep about 50,000 Kansans from starting or continuing to smoke. That will help draw down state medical costs, because a disproportionate number of Kansans who are on Medicaid use tobacco.

"Smoking is one of the key cost drivers in Medicaid," Willett said.

The Kansas Health Foundation is the primary funder of the Kansas Health Institute, which is the parent organization of the editorially independent KHI News Service.

Willett said Kansas is falling behind other states in tobacco prevention efforts, which is causing the state to slide in health rankings.

Jodi Radke, director of the Campaign for Tobacco-Free Kids' Great Plains Region lobbying efforts, said research on many tax increases across several states showed they provide a reliable source of revenue and only a small percentage is lost to online sales, cross-border sales or cross-border smuggling. A recent successful example, she said, was Minnesota, which raised its cigarette tax to almost $2.50-per pack more than North Dakota despite having a metropolitan area, Fargo-Moorhead, that straddles the state line. 

"Every state that has significantly increased its tobacco tax has recovered more in revenue than its neighboring states while reducing cigarette sales," Radke said. "This is true 100 percent of the time."

Roy Jensen, director of the University of Kansas Cancer Center, said the tax bill represents proven policy that would decrease the number of Kansans who smoke and in turn decrease the number who get cancer. He disagreed with those who cast it as a knee-jerk budget fix.

"This is a very significant piece of legislation," Jensen said. "From my standpoint it's the one opportunity this Legislature and the state government has this year to do something that is visionary in nature and not focused solely on the immediate urgent issue of the budget."

Reagan Cussimanio, a lobbyist for the American Cancer Society's Cancer Action Network, called the tobacco tax increase "the ultimate consumption tax" because consumers could choose not to purchase and use tobacco. She said tobacco use currently saddles all Kansas households with $825 per year in public health costs, even if they don't use themselves.

Cussimanio also said it would be a mistake to evaluate the legislation without taking into account its health benefits, noting that it is projected to prevent about 15,000 Kansans from dying of tobacco-related illnesses.

"It's rare that you find a tax that actually can save lives," Cussimanio said.

Reagan Cussimanio, a lobbyist for the American Cancer Society's Concern Action Network, said the proposed tobacco tax increase would save lives.