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State Lawmakers Hope One Bill Can Raise Revenue, Curb Smoking

Sunday, January 29, 2012

With a looming budget crisis and a large population of unhealthy smokers, Alabama could find a partial solution to both problems in taxes, some advocates and politicians say.

Alabama has one of the nation’s highest rates of cigarette smoking, known to cause many health problems and raise medical costs in the process. The state is also facing a projected $400 million deficit in its next budget due to the loss of federal stimulus money.

To some medical experts and anti-smoking advocates, raising taxes on cigarettes could address both problems at once — discouraging people from buying more cigarettes in the long run while generating more revenue for state coffers in the short run.

“I’m not a big tax guy, but this is one tax I can support,” said Dr. William Bailey, professor of medicine in the Lung Health Center and eminent scholar chair in pulmonary diseases at the University of Alabama at Birmingham. “It actually provides an increase for tax revenue and the only negative impact is on smokers … keeping them from buying more cigarettes.”

According to the American Lung Association, at 42.5 cents per pack, Alabama has the fifth-lowest excise tax on cigarettes in the United States. And according to the National Cancer Institute, Alabama has the seventh-highest rate of smoking in the United States at 22.5 percent of the population.

In contrast, California has an 87-cent tax on each pack of cigarettes and has a smoking rate of 12.8 percent.

“Studies show that if you don’t start smoking by age 20, then it is unlikely that you ever will,” Bailey said. “Most smokers start when they are experimenting as teens. The reason the tax works is most teens don’t have enough disposable income to buy cigarettes.”

Ginny Campbell, government relations director in Montgomery for the American Cancer Society, agreed with Bailey about the benefit of high cigarette taxes.

“Figures and statistics do show a decline among adults and particularly teenagers — the more expensive cigarettes are, the less likely kids are to buy them,” Campbell said.

High health cost

The high levels of smoking in Alabama have come with a heavy price.

A report compiled by the Institute for Social Science Research at the University of Alabama for the Alabama Department of Public Health shows that the life lost in Alabama due to smoking is significantly high. The report states that in 2009, 8,685 Alabama deaths were attributed to smoking-related diseases. The report adds that 15.3 years of potential life were lost, on average, among Alabama adults who died from a smoking-related illnesses.

“Smoking is the most preventable cause of death in the U.S.,” Bailey said.

The report also lists the financial costs of smoking, indicating that in 2010, $1.66 billion in excess personal medical care expenditures in Alabama were attributed to smoking. It also estimated that $941 million in productivity losses in Alabama in 2010 were attributable to smoking-related illnesses.

New revenue?

Still, Alabama’s cigarette tax provides considerable revenue each year. According to the Alabama Department of Revenue, the state cigarette excise tax generated approximately $130 million in 2011, $131 million in 2010 and $135 million in 2009. If the tax were to increase significantly, it could help to ease Alabama’s budget problems.

Two bills filed in advance of the upcoming sessions of the Alabama Legislature look to address just that issue.

One bill, filed by Rep. Joe Hubbard, D-Montgomery, would raise the state excise tax by $1 per pack. The other bill, filed by Rep. Patricia Todd, D-Birmingham, would raise the tax to 75 cents per pack.

If Hubbard’s bill had been the law at the beginning of fiscal 2011, at the end of the fiscal year the excise tax would have generated approximately $435.9 million for the state — an increase of $305.9 million.

To Hubbard, raising the cigarette tax is not about fighting smoking. It’s about addressing the state’s revenue issues and ensuring all residents pay their fair share. Hubbard said many of the state’s Medicaid costs go to cover smoking-related illnesses.

“It’s only logical that the burden of that not be handled evenly, but that smokers handle a higher tax,” Hubbard said. “That’s as fiscally conservative as it gets.”

Hubbard compared his view on the cigarette tax to the gasoline tax.

“The more you use state roads, then the more you pay for the upkeep of those roads,” he said.

Hubbard said his bill would earmark the extra tax revenue just for the state’s Medicaid program.

“That would free up a whole lot of dollars in the General Fund for other things,” he said. “If we do that, then what we won’t have to do is take dollars out of classrooms.”

Todd, who has filed her bill for the past three years, said she wants to decrease smoking rates in the state along with generating more revenue.

“This is a win-win bill,” she said. “It will raise additional funds … and studies show that states with higher taxes have less smoking.”

Unlike Hubbard’s bill, however, Todd’s bill does not earmark the extra tax revenue and instead would just funnel the money into the General Fund.

“We need to stop earmarking,” she said. “People are afraid the Legislature won’t make the right decisions with the money, and I can agree with that, but at the same time, it ties our hands and keeps us from using money where it is most needed.”

In any case, Todd has little confidence the Republican-controlled Legislature will raise the cigarette tax this year, despite the budget crisis. She has good reason for doubt.

Gov. Robert Bentley has said he is against raising taxes to address the current budget problems. He reiterated the point Thursday as a guest speaker at the Calhoun County Chamber of Commerce Annual Economic Forum.

“We’re going to do it right and do it without raising taxes,” Bentley said about the fixing the budget deficit.

However, the state’s most powerful senator, Alabama Senate President Pro Tem Del Marsh, R-Anniston, said an increase in the cigarette tax could be a possibility.

“Right now, anything is on the table,” Marsh said, adding that he has not signed on for any solution yet. “The governor, he’s taken the position of no new taxes. But in reality, I think it’s hard to say never.”

Marsh noted that in general, he has been a supporter of efforts to reduce smoking and smoking-related illnesses in the state, including supporting a statewide smoking ban in all public places.

“I have supported that bill in the past,” he said. “But I don’t want to legislate health. What I want to do is encourage people to be healthier.”

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Keywords: State,Alabama, Bill, Revenue, Smoking

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