The Legislature’s Taxation Committee is considering a bill that would raise the state cigarette tax by $1.50 per pack.
AUGUSTA — Proponents of raising the state tax on cigarettes by $1.50 per pack hope this session to overcome opposition that has stymied the anti-smoking effort for years.
Sponsor Rep. Joyce “Jay” McCreight, D-Harpswell, called it “sound tax policy and sound health policy” that would bring in more than $40 million in additional revenue per year while discouraging people from smoking.
She told the Committee on Taxation that the proposed tax hike would reduce youth smoking by nearly 20 percent and help cut down on cancer and heart disease caused by tobacco addiction.
Critics said that increasing the existing $2-a-pack tax — lower than all but one New England state — would smack small store owners, burden the poor and encourage smuggling of cigarettes from lower-tax locales.
That cost, though, is worth the gain in improved health, advocates said.
Hilary Schneider, the Maine Government Relations director for the American Cancer Society’s Cancer Action Network, said a tax increase on cigarettes is “a proven public health best practice for preventing and treating tobacco addiction.”
“Smoking remains the world’s and Maine’s most preventable cause of death,” she said, with 9,000 Mainers learning every year they have cancer, some of it caused by smoking. On average, at least six Mainers die prematurely each day because they smoked, Schneider said.
Brandi Cushman, the tobacco manager for the South Paris-based C.N. Brown Co. that owns 73 Big Apple convenience stores in Maine, told lawmakers the proposed increase would have a detrimental impact because it would spur more internet and black market sales as well as people traveling to New Hampshire, which has lower taxes, to buy cigarettes more cheaply.
She said cigarettes provide 37 percent of in-store sales, so if customers turn elsewhere for their cigarettes, it will hurt overall sales, especially at the nine Big Apple stores near New Hampshire, which would have a $17.20-per-carton advantage over Maine if the higher tax is adopted.
“Regardless of how you feel about tobacco products, they are still legal and the state’s tobacco retailers should not be deprived of an opportunity to make a profit from their largest-selling product,” said Joanne Mendes, executive director of the New England Convenience Store & Energy Marketers Association.
Losing cigarette sales would force community markets to raise prices on other products, such as eggs and milk, in order to survive, said Jamie Py, president and chief executive officer of the Maine Energy Marketers Association. The small stores are often in out-of-the-way places with few alternatives for customers.
Thomas Briant, executive director of the National Association of Tobacco Outlets, also focused on the impact on ordinary Mainers, insisting the proposed tax hike would “fall most heavily on residents with low incomes, lower levels of education, and working class occupations” who are more likely to be smokers.
“Many Mainers are already struggling; therefore, we cannot support tax increases of this magnitude as it will surely decrease each Mainer’s ability to purchase necessary grocery items,” said Shelley Doak, the Maine Grocers & Food Producers Association’s executive director.
As a practical matter, the tax gap the increase would create between Maine and states with far lower taxes might spur smuggling, critics of the idea said.
Dan Riley, a Kennebunk attorney who represents Reynolds American, a major manufacturer of cigarettes, said that “if Maine enacts this proposed cigarette tax increase, smugglers could make approximately $1.5 million by transporting one tractor-trailer load of cigarettes from Virginia to Maine” — a “very lucrative” return that some may find hard to resist.
Riley also pointed out that when Maine last raised its state excise tax by $1-a-pack in 2005, it led to New Hampshire alone gaining almost 7 million pack sales. That’s one reason lawmakers have turned aside repeated efforts to increase the tax in the years since.
Supporters of the tax said that arguments against the tax increase are a smokescreen.
Becky Smith, government relations director for the American Heart Association, said increasing cigarette taxes has a proven ability to reduce the number of smokers, especially young ones.
“The tobacco industry won’t like this sound public health revenue plan,” Smith said. “They know that raising the price of cigarettes and other tobacco will cause real decreases in tobacco rates and make it harder to find” a new generation of smokers.
Smith said the proposal “also allocates some of the revenue from the increase in the cigarette tax to cover the expected increase in demand for cessation services as well as to bring Maine in line with the U.S. Centers for Disease Control and Prevention recommended funding for a state tobacco program.”
“The current underfunding, and unwillingness or inability to fill crucial vacancies has resulted in stunning lost opportunities,” she said.
The bill would allocate nearly $10 million a year for smoking cessation efforts, including $8.1 million for the Maine Center for Disease Control and Prevention and $750,000 annual payments to MaineCare.
Abigail Rogers, the director of advocacy and government affairs for March of Dimes Northeast, said the higher tax and smoking cessation efforts sought by the bill “will help pregnant women quit smoking, protect women of childbearing age and children from secondhand smoke exposure and reduce smoking-affected births in Maine.”
Rebecca Boulos, executive director of the Maine Public Health Association, said the proposed tax hike would help prevent young people from beginning to smoke and would curtail smoking generally.
That means, she said, “more people will have more money to invest in the economy instead of an addiction. It will make them more employable, and will lower health care costs for everyone.”
Legislators have yet to take any action beyond a public hearing on the proposal.
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