House Bill 3584 was recently introduced by South Carolina Speaker Bobby Harrell (R-Charleston). This bill, if passed, would result in a 714% increase in the state’s tobacco tax. Ouch.
ATR vehemently opposes this legislation for a number of reasons. First, this bill would levy a massive tax hike on South Carolinians in the midst of an economic downturn. What’s worse, its impact would be felt predominantly by those least able to afford it. On average, smokers, whose median income is a little more than $36,000, make about 30 percent less than non-smokers.
Furthermore, Obama just signed a 156 percent increase the federal excise tax on smokes into law. Yet somehow lawmakers in SC believe it wise to pile on with their own increase.
The one good part of this bill is that it provides a credit for health insurance to eligible South Carolinians, presumably to offset the tax hike. However the bill includes no language that applies this credit to income tax liability, making this credit not so much a credit, but rather simply a government outlay.
So all together Harrell’s bill entails nothing more than a tax and spending increase – no thank you.
Politicians seem unable to learn that cigarettes are a dubious and declining source of revenue. Here are a couple of fun facts for those scoring at home:
1) New Jersey raised the cigarette tax 17.5 cents in 2007. They expected to bring in an additional $30 million, but the state ended up losing $24 million in total tax revenue from tobacco.
2) Maryland doubled the cigarette tax to $2 last year and cigarette sales dropped 25%, hitting expected tax revenue.
This bill is bad policy and a clear violation fo the Taxpayer Protection Pledge. Gov. Sanford and 13 members of the South Carolina Senate have signed the Pledge, as have 31 House members.
HB 3584 currently sits in the House Ways & Means Committee awaiting consideration. ATR encourages South Carolina taxpayers to call their representatives and/or Speaker Harrell to voice their opposition. Harrell can be reached at 843-572-1500.