Pro-business lobby speaks out against ND tobacco tax bills

By Nick Smith / Bismarck Tribune

BISMARCK – Lawmakers attempting to raise the state’s tax on tobacco products for the first time in more than two decades acknowledge long odds as they face off with business groups that have successfully beaten back previous efforts.

One tobacco tax bill has been introduced in each chamber. The head of a state retail association says lawmakers’ efforts are misguided and would hurt businesses when the state is wrestling with a potentially tough budgeting effort due to slowing oil activity.

North Dakota ranks 46th nationally in tobacco taxes at 44 cents per pack, higher than Alabama, Georgia, Louisiana and Virginia. The price hasn’t been raised since 1993.

The two pieces of legislation aimed at tobacco taxes are House Bill 1421 and Senate Bill 2322.

HB1421 would raise the state’s cigarette tax to $1.54 per pack. It would also raise the excise tax on other tobacco products from 28 percent of the wholesale purchase price to 43.5 percent. The House Finance and Taxation Committee picks up the bill at 9:30 a.m. Tuesday.

SB2322 would raise the cigarette tax in the state to $2 per pack.

North Dakota Retail Association President Mike Rud is adamant in his opposition.

“This isn’t the time to tax any business in North Dakota,” Rud said. “The idea that a tax increase is going to help people not smoke, it doesn’t hold any water.”

HB1421 prime sponsor Rep. Jon Nelson, R-Rugby, disagreed.

“We’ll just present factual data that should support the fact that this will decrease the number of smokers,” Nelson said.

The recently unveiled legislation was touted along with data from the Campaign for Tobacco-Free Kids.

The organization’s data says a cigarette tax of $2 per pack would prevent an estimated 7,500 people younger than 18 to not smoke and prompt an estimated 8,000 adult smokers to kick the habit. The organization also claims this could result in $300 million in savings in future health care expenditures.

Long odds

Nelson admitted the tobacco tax bills face long odds: Similar legislation failed in 2013.

“We’re going to need a lot of help from our stakeholder groups to get over the hill,” Nelson said.

He said HB1421 would generate an estimated $103.5 million during the 2015-17 biennium. This doesn’t include the $50 million per biennium the state’s general fund would still receive in tobacco taxes.

“I think public sentiment is the main thing,” Nelson said. “We need the public to weigh in.”

Through HB1421, 60 percent of the new revenue would go toward health-related programs in the state’s Community Health Trust Fund, Nelson said. The rest would go to local communities for health-related programs.

Low smoking rates

Rud countered with 2012 data from the Centers for Disease control and prevention that shows tobacco use isn’t a major problem in North Dakota.

“North Dakota’s smoking rates are very low despite the state having some of the lowest tobacco taxes in the nation,” Rud said.

He said North Dakota in 2012 ranked 37th in adult smoking and 49th in smokeless tobacco use. Rud said among youth smokers, North Dakota ranked 34th among 44 states reporting data.

“Proponents of raising the state’s tobacco taxes would have us believe that low taxes are encouraging more tobacco use. But that contention isn’t supported by the data,” Rud said.

SB2322 prime sponsor Sen. Tim Mathern, D-Fargo, said the key target in tobacco tax legislation is youth.

“If we can keep them from smoking up to age 18, the odds of them ever smoking is close to zero,” Mathern said.

Mathern said North Dakotans have had smoke-free public places since June 2012. He said arguments against smoke-free public places were that it would negatively impact restaurants and bars.

“The scares that were around before … have proven not to be the case,” Mathern said.

He said retailers, such as gas stations, also have little to worry about.

“I would say to all these store owners: Do they want their children to smoke? Do they smoke? Consider the broader implications,” Mathern said.

Mathern said he believed the savings on health care to employees and having more healthy customers alive and able to come into their stores for other purchases would offset the losses in tobacco sales.

http://www.inforum.com/news/3670143-pro-business-lobby-speaks-out-against-nd-tobacco-tax-bills