Proposed tobacco tax hike debated
By Nick Smith, Bismarck Tribune
Health care officials gathered to voice support Tuesday for an increase to the state’s tobacco tax while business leaders lined up in defense of the status quo.
Nearly 50 people packed the Fort Totten Room for the hearing on House Bill 1421 before the House Finance and Taxation Committee.
HB1421 takes aim at North Dakota’s tax rate for tobacco. The state ranks 46th nationally in tobacco taxes at 44 cents per pack, ahead of Alabama, Georgia, Louisiana and Virginia.
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.
Similar legislation died in 2013, one of several previous unsuccessful legislative efforts to raise the tax since it was last increased in 1993.
“This bill is intended to stop young people from beginning to smoke. This is primarily for the health of North Dakota,” said Rep. Jon Nelson, R-Rugby, who estimated $103.5 million in new revenue would be generated during the 2015-17 biennium.
That figures does not include the $50 million per biennium the state’s general fund would still receive in tobacco taxes.
Sixty percent of new revenue would go toward health-related programs in the state’s Community Health Trust Fund. The rest would go to local communities for health-related programs.
Cost of prevention
Data from the Campaign for Tobacco-Free Kids says a cigarette tax of $2 per pack would prevent approximately 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.
“With the retail sector of the state’s economy hitting on all cylinders, why would any legislator support throwing a wrench into the economic engine?” asked Mike Rud, president of the North Dakota Petroleum Marketers Association.
Data from the Centers for Disease Control and Prevention for 2012 shows that tobacco use isn’t a major problem in North Dakota, according to Rud, pointing out that North Dakota 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.
“Contrary to what some may believe, North Dakota retailers don’t stand in the driveway or on the storeroom floor attempting to sell tobacco products,” Rud said. “We simply attempt to meet consumer demand. Don’t tie our hands.”
Dr. Eric Johnson, of Grand Forks, said North Dakota largely gets top marks from the American Lung Association’s annual state by state report card on tobacco control. Prices are the one area in which North Dakota gets a flunking grade, which Johnson called the main hole in the state’s tobacco cessation program.
Johnson also criticized the state for being 46th in tobacco taxes.
“If we were 46th in diabetes and obesity management, I don’t think we’d be happy with that,” Johnson said.
Paul Mutch, owner of Mutch Oil Company in Larimore, also voiced opposition to HB1421.
Mutch said, with national discussion on middle class needs and taxes, he found it odd the state would consider raising any taxes that would impact lower-income individuals most. CDC data puts 32 percent of North Dakotans earning less than $15,000 annually as smokers compared to 15.5 percent for those earning more than $50,000.
“I don’t believe raising taxes would result in any fewer smokers,” Mutch said. “Just more North Dakota residents with less money in their pockets for the things they really need.”
