Tax Update
“Just the smokers” shouldn’t have to pay for anything that all people use.? Let all people pay for things that all people use!
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Baldacci singing an old tune
January 14, 2009
It’s become an old song in Maine … and a tiring one.
Augusta gets fat and happy with taxpayer money. Then when the economy goes bust, the governor — this time Baldacci — tells Mainers it’s time to tighten their belts.
Saturday, Gov. John Baldacci used his weekly radio address to give Mainers a pep talk.
Of course it was easy for the governor to recall the sacrifices made by previous generations during hard economic times. His predecessors sang the same old song, one Baldacci himself has been humming almost since the day he came into office.
That’s not to say Maine’s economy — and that of the nation — is not in trouble. It is to say, Maine’s troubles have much to do with the routine spending sprees conducted in the chambers of state government.
So sick of Augusta’s shenanigans were voters a few years back, they forced the passage of LD 1 to lock in the state’s responsibility to fund local education.
Unfortunately, there is a strong sentiment that LD 1 has become only a numbers game. Sort of the neighborhood bully: “You may have gotten the better of me in the school-funding game, but wait until I tuck it to you elsewhere.”
The predictability of Maine’s fiscal troubles has become as easy as figuring out the next leap year. And Augusta’s response is always the same: rob from the poor taxpayer to feed the rich legislative appetite — take back the money intended for cities, towns and schools.
Baldacci is correct in one sense. Struggling families of Maine learned a lesson generations ago. The difference is that unlike those sent to Augusta to govern, they never forgot what it means to be in need.
As a result, Mainers are already used to hunkering down in bad times and saving their money when the going is good.
The problem comes from Augusta not knowing how to do the same.
John Baldacci will soon be gone. His tenure will not have been a complete loss.
John Baldacci will soon be gone. His tenure will not have been a complete loss.
There is LD 1, for what residual value it will have. And there is the school consolidation plan that took a lot of chutzpah to push through the Legislature.
But in the end, Baldacci will probably not have been able to hold back the legislative tide that has overcome Maine governors for decades.
The only solution will be to clean house in the next round of elections to the Statehouse.
What Baldacci said of the state’s current financial plight can be said of the task that lies ahead of voters who must clean house in Augusta.
“The task is daunting and will require all of us — working together in a spirit of cooperation and bipartisanship — to find the best path forward.”
That path is to send a governor and legislators to Augusta who are true and frugal Mainers. Not carpetbaggers who go on spending sprees with taxpayer money at the drop of a hat.
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Despite the criticism leveled here of Gov. Baldacci, he has laid out a solid challenge to the Legislature in an effort to get the state budget back in line.
He is drawing a line on increasing any broad-based taxes, looking to cut the state payroll, and trim tax rebate programs.
Undoubtedly, loud squealing will be heard. But as Baldacci challenged on Saturday, “… our parents and grandparents suffered through the Depression and world wars. They understood that tough times require sacrifice and ingenuity.
“They made those tough choices and built a more prosperous world.”
That said, the question remains: Is Maine’s Legislature up to the challenge laid out by Baldacci and demanded by the current recession?
Maine Governor Supports Cigarette Tax Increase To Fund State Health Program
Apr 04, 2008
Maine Gov. John Baldacci (D) on Tuesday announced that he supports a proposed 50-cent-per-pack cigarette tax increase to fund the state Dirigo Health program, Blethen Maine/Portland Press Herald reports. In March, Baldacci had said that while he supported the language of the bill, the timing was not right to discuss the matter. However, Baldacci now said he is prepared to work with lawmakers on the bill because the state’s budget is balanced, Blethen Maine/Press Herald reports.
Dirigo provides coverage for about 14,000 state residents and is funded by premiums paid by employers and their employees, as well as a so-called offset payment from insurance companies. The program also covers 5,600 Medicaid-eligible adults at a cost of about $5 million (Cover, Blethen Maine/Portland Press Herald, 4/2).
Apr 04, 2008
Maine Gov. John Baldacci (D) on Tuesday announced that he supports a proposed 50-cent-per-pack cigarette tax increase to fund the state Dirigo Health program, Blethen Maine/Portland Press Herald reports. In March, Baldacci had said that while he supported the language of the bill, the timing was not right to discuss the matter. However, Baldacci now said he is prepared to work with lawmakers on the bill because the state’s budget is balanced, Blethen Maine/Press Herald reports.
Dirigo provides coverage for about 14,000 state residents and is funded by premiums paid by employers and their employees, as well as a so-called offset payment from insurance companies. The program also covers 5,600 Medicaid-eligible adults at a cost of about $5 million (Cover, Blethen Maine/Portland Press Herald, 4/2).
Cigarette tax shortfall burning hole in budget
September 20, 2007
Victoria Wallack
AUGUSTA (Sep 20): Cigarette taxes in Maine — eyed as a source of new revenue for the state and federal government — have come in short by about $800,000 a month, on average, since January, adding to an expected budget hole legislators will have to fill when they return next year.
September 20, 2007
Victoria Wallack
AUGUSTA (Sep 20): Cigarette taxes in Maine — eyed as a source of new revenue for the state and federal government — have come in short by about $800,000 a month, on average, since January, adding to an expected budget hole legislators will have to fill when they return next year.
From January through June, cigarette tax revenue was below budget by $5 million. Revenue was down another $850,000 in July — the start of the state’s fiscal year — and $600,000 in August.
No one is quite sure what is happening with sales in Maine, but it appears more people are either quitting, switching to lower-taxed tobacco products such as roll-your-own cigarettes, or shopping on the Internet or over the border because Maine’s cigarette tax is $2 a pack.
If the federal government raises its taxes on a pack to fund expanded health care for children, Maine could lose even more sales. The state is projecting that raising the federal tax from 39 cents to $1 will cost Maine about $5.5 million.
Health-care advocates say they would like to tax smoking out of existence, but that also would leave a $160 million hole in the budget — the amount currently budgeted for one year’s worth of cigarette taxes.
While revenue forecasters acknowledged the downward trend in state sales toward the end of the fiscal year that ended June 30, they did not adjust projections for the state’s new two-year budget that went into effect July 1.
“We didn’t do anything for the out-years because we wanted to see if that pattern was going to continue,” said Mike Allen, director of research for the Maine Revenue Service.
Allen now believes it will, and he predicted when the Revenue Forecasting Committee meets in November, “it’s likely they will be recommending to bring that revenue source down for this fiscal year.”
The Maine Revenue Service is also trying to figure out what’s going on, since the numbers in 2007 are not following a projection formula that in the past has been reliable.
Those projections are critical, since the state and the federal government use hikes in the cigarette tax to raise new revenue in times of budget shortages or to pay for new programs. Polls show that raising taxes on cigarettes is more palatable with the public because smoking is now viewed as a deadly vice.
Maine raised its cigarette tax by $1 a pack in 2005 to fill a budget hole, and Gov. John Baldacci proposed raising it another $1 earlier this year to do the same thing — a plan that failed largely due to Republican opposition to any new taxes.
Others have proposed the tax could be raised to help pay for the state’s subsidized Dirigo Health insurance program going forward.
Congress also is looking at raising the 39-cent federal tax on cigarettes to help pay for an expansion of Medicaid that gives health insurance to lower-income children. A Senate proposal would raise it 61 cents to $1. The House has proposed raising it by 45 cents.
Allen said the rule of thumb has been that for every $1 the cigarette tax is raised, there is a corresponding loss of 12 percent in sales. That’s in addition to the 1 percent drop figured in annually because aggressive state and national anti-smoking campaigns are getting people to quit.
“That worked pretty well until January of ’07 [when cigarette tax revenue started to drop unexpectedly],” Allen said. The trick now is figuring out what assumptions have changed.
“When we estimated a 12 percent decline … that captures a lot of different kind of behavior,” he said. “People could be quitting, cutting back, switching to other types of tobacco. People could be going to New Hampshire. People could be going to the Internet.”
The Maine Revenue Service is working on developing a more accurate formula at the same time it goes after tax cheats — with a new focus on Internet sales.
Errol Dearborn, director of the compliance division for Maine Revenue, said he’s collected $950,000 in owed taxes in the last two-and-a-half years from people who have purchased cigarettes from out-of-state vendors, largely over the Internet.
Federal law has long required so-called remote sellers to report their sales to states so they may collect relevant taxes from the buyers, but the law was initially aimed at mail order. With the advent of the Internet, those sales have increased along with lost tax revenue.
Dearborn said 10 remote sellers have reported on their own to the state. He suspects there are many times more than that in operation. “These things [retailers] pop up and go out of business quicker than you can blink,” he said.
To catch them, his office makes a buy and then demands the sales records for all cigarettes sold in Maine. It then contacts the buyers and requires they pay their taxes.
Those companies that refuse to comply are turned over to the Attorney General’s Office, which can compel compliance or ban a company from doing business in Maine. Dearborn said there are currently eight cases pending with the state’s attorneys.
He said the state’s efforts at recovering lost taxes have been helped by a federal crackdown on Internet vendors because of their criminal connections.
“The federal government being concerned in this has helped all the states,” Dearborn said. “Some of these sellers have ties to organized crime or terrorist organizations. They make lots of money.”
Budget deal all but done
May 25, 2007
By Francis X. Quinn, Associated Press Writer
By Francis X. Quinn, Associated Press Writer
AUGUSTA, Maine –Leaving the door open to one last round of negotiated spending, legislative bargainers put finishing touches Friday on a two-year budget package worth close to $6.4 billion that includes a mandatory school system consolidation plan and does without a major tobacco tax increase originally proposed by Gov. John Baldacci.
“We’re going to lose a few of ours and we’re going to lose a few of theirs” when majority Democrats and minority Republicans on the Appropriations Committee send their final product upstairs for consideration by the full Senate and House of Representatives, said Democratic Rep. Jeremy Fischer of Presque Isle, the Appropriations Committee’s House chairman.
But with House and Senate leaders on board and the committee itself strongly united, prospects for passage would seem to be positive.
A wild card, however, is the reception for the school system consolidation component, which seeks to address widespread demands led by Baldacci for a cost-saving reining-in of Maine’s far-flung network of local school units while also accommodating legislative and local concerns about top-down regulation.
Baldacci’s original proposal was to establish 26 regional education units, a significant reduction from Maine’s current 152 school administrative systems.
The revised plan prepared for inclusion in the budget envisions 80 units, based on desired student populations of about 2,500. Exceptions would be available, but sanctions could face non-complying communities. The budget package counts $36.5 million in savings.
Service cuts, funding transfers and numerous other budgetary initiatives are designed to balance the overall package while dispensing with the governor’s proposal for $136 million in new tobacco levies.
To show the depth of spending cutbacks already put forth, Baldacci administration officials this week outlined $130 million to $140 million in savings that had been proposed within the state Department of Health and Human Services.
Still up for debate, participants said Friday, were additional spending initiatives including more funding for higher education. That issue could simmer over the weekend. A final review of new budget language by the Appropriations panel is not expected before Tuesday.
Last Monday, University of Maine System trustees tentatively raised tuition by an average of 12.6 percent while appealing to the Legislature for additional state funding to help soften the blow.
The board authorized Chancellor Terrence MacTaggart to recalculate and lower the tuition hike in the event that lawmakers approve a university appropriation that exceeds the $5 million increase contained in Gov. John Baldacci’s proposed budget.
Tuition at the seven-campus system has gone up each year since 1996 and now averages $6,450 a year for undergraduates. Last year’s increase averaged 8.7 percent systemwide.
MacTaggart said adding $6 million to the governor’s recommended $5 million increase would lower the tuition hike to 7 percent.
Republican insistence that new taxes be avoided appeared to have been rewarded in the all-but-final package.
Rep. Sawin Millett, R-Waterford, the ranking House Republican on the Appropriations Committee, said the budget total would be about $100 million less than Baldacci requested.
“This budget still takes care of those Mainers who are most in need, but we engaged in a process of setting spending priorities, which is not typical,” Millett said in a statement.
“Even though we are in the minority, we were able to exert influence on priorities. And some of the structural changes we are making in education and MaineCare are critical, so that future budgets will not be driven by unsustainable cost pressures, Millett said.
Democratic Sen. John Martin of Eagle Lake said he saw no real winners and losers among various legislative factions.
“I’d say no one got anything. It’s bare-bones,” he said.
A late amendment was prepared Friday to reflect a $26 million contract settlement with the largest state employees union. The cost was said to be the equivalent of 2 percent increases in each year of the biennium.
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Darlene Brennan – The Smoker’s Club, Inc. – New England Regional Director
The United Pro Choice Smokers Rights Newsletter – http://www.smokersclubinc.com
Maine Smokers Rights – http://www.geocities.com/shelioness/mainerights.html
mailto:darlene@maine.rr.com – Respect Freedom of Choice!
Higher tobacco tax touted at State House rally
May 10, 2007
Stan Hart
AUGUSTA — It’s becoming protest season at the State House.
May 10, 2007
Stan Hart
AUGUSTA — It’s becoming protest season at the State House.
A couple of hundred critics of proposed cutbacks in health care programs turned out Thursday to voice their views and lobby legislators. Speakers touted a 75-cent-per-pack increase in Maine’s cigarette tax as a way to avoid what they warned would be steep human services reductions.
Gov John Baldacci originally proposed raising the state tax on a pack of cigarettes by $1, producing $66 million a year and bringing the per-pack tax to $3.
Democratic leaders said a full dollar increase would be very difficult to pass. In the face of Republican opposition, prospects for even a lesser amount remain uncertain.
Thursday’s rally, which brought together advocates for mental health services and representatives of unionized state workers, among others, was just the latest of mass expressions of disapproval over the direction of extended budget talks involving the Baldacci administration, legislative leaders and the Appropriations Committee.
One day earlier, a parade of horse trailers, dump trucks and other vehicles circled the capitol complex as about 200 harness racing men and women, construction workers and other racino supporters held a rally of their own.
That followed Penn National Gaming’s decision to interrupt work on its $131 million Hollywood Slots facility in Bangor amid legislative discussions about increasing the state’s take.
“It’s important for people to let us know how they feel,” said Sen. Margaret Rotundo, D-Lewiston, the Senate chairwoman of the Appropriations panel. “The important piece to remember is these are proposals.”
Republican lawmakers have suggested reducing the state share of employee health insurance from 100 percent to 85 percent, drawing the ire of the Maine State Employees Association.
House Minority Leader Josh Tardy, R-Newport, defended the GOP’s stance in budget negotiations as “responsible” and echoed Rotundo in stressing the tentative nature of bargaining to date.
“The proposal put forth as a discussion point in budget negotiations would require a state employee to contribute approximately $94 per month for their health insurance. … How many businesses in Maine can afford to offer their employees a top-of-the-line health insurance plan with the employer picking up 100 percent of the cost?” Tardy asked.
Rotundo said Appropriations Committee members had more talking to do.
“We will be working this out publicly,” she said. “All of this is a work in progress.”
Over the border for cigarette shopping
3/11/07
PORTLAND, Maine — The Maine Heritage Policy Center recently released a new report analyzing proposed tobacco tax increases titled, “Smoke and borders: How tobacco tax increases promote cross-border shopping. The Maine Issue Brief report was written by J. Scott Moody, vice president for policy and chief economist for The Maine Heritage Policy Center.
“Policymakers must recognize that there will be a market reaction to any new tobacco tax increase,” Moody said. “Cross-border shopping will result in less-than-projected tax revenues and lower sales for Maine retailers.”
Moody’s report analyzes the phenomenon of cross-border shopping for cigarettes. Cross-border shopping is when an individual from one state travels to another state in order to avoid paying a state tax on an item.
With cigarettes, cross-border shopping happens nationally as each state has varying levels of tobacco taxes. In his analysis, Moody found that in New England, New Hampshire benefits greatly from cross-border shopping for cigarettes.
New Hampshire’s cigarette tax rate (80 cents per pack) is significantly lower than the rate in Maine ($2 per pack), Massachusetts ($1.51 per pack) and Vermont ($1.19 per pack) in fiscal year 2006.
An especially compelling example of cross-border shopping to avoid paying cigarette taxes occurs when comparing New Hampshire and Maine.
Despite New Hampshire having a much lower cigarette tax rate (80 cents versus $2 per pack), and both states having nearly the same size population, New Hampshire raised almost the same revenue as Maine did from cigarette taxes in fiscal year 2006 ($138 million versus $153 million).
Notable in the New Hampshire/Maine comparison is that the variance in revenue generated by tobacco taxes is not the result of dramatic differences in the smoking rates between the two states.
For both states, smoking rates are comparable. Instead, New Hampshire makes up the difference in the tax difference by drawing customers from the surrounding New England states.
Additionally, Moody analyzed proprietary data provided by Big Apple/CN Brown convenience stores in Oxford County, York County and New Hampshire.
The data revealed the percent change in cigarette sales at Big Apple/CN Brown convenience stores after the $1 per pack cigarette tax increase between 2005 and 2006.
Since Oxford and York County directly border New Hampshire, the cross-border shopping effect is most acute there.
In fact, the average cigarette sales fell by 9.9 percent in Oxford County and 7.1 percent in York County.
At the same time, sales rose in their New Hampshire stores by an average of 7.8 percent.
Moody’s report is available at www.mainepolicy.org.
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Smoked out
3/11/07
The tightening rules have angered some smokers. Darlene Brennan of Caribou, a leader of the Maine Smokers Rights group, which numbers about 100 members, escapes high taxes by rolling her own cigarettes. She refuses to eat in smoke-free restaurants.
“It’s my dime; why should I go sit in a reform school setting?” she said. “I don’t drink. This is my only vice.”
Tobacco firm fights new cigarette tax
March 10, 2007
Meg Haskell
Meg Haskell
AUGUSTA – Cigarette smokers in Maine are plenty aggravated over a proposed increase in the tax on a pack of cigarettes; a scan through the “reader comments” section of the Bangor Daily News Web site makes that clear.
But according to a spokesman from the country’s leading cigarette manufacturer, the state has more to fear than the ire of disgruntled consumers. Bill Phelps, manager of media affairs for Philip Morris USA, was in Augusta on Thursday, sounding the alarm over the “unintended consequences” of adding another dollar to the already steep $2 excise tax on every pack of cigarettes sold in Maine.
Phelps flew to Maine from Richmond, Va., where Phillip Morris is based, to talk with State House reporters about Gov. John Baldacci’s proposed tax increase. The measure is included in the governor’s biennial budget, now under contentious review in the Legislature.
Phelps said using a tax increase on cigarettes to fill budget needs is unlikely to raise as much money as policymakers would like.
“Predicting revenue can be extremely difficult,” he said, since some consumers will simply pay the extra dollar, while others will quit smoking or purchase their cigarettes over the Internet or from other sources in order to avoid the expense.
“It may provide a short-term fix for a budget gap, but it creates another hole further down the road,” he said. “In our view, because the tax revenue is so unpredictable when it comes to cigarettes, an increase is akin to sweeping the [budget] problem under the rug.”
Other states that have ramped up taxes on cigarettes have been disappointed, he said.
In Maine, the governor’s proposal is projected to raise about $66 million a year for the General Fund.
Phelps also predicted that many Mainers would take their cigarette business across the state line to New Hampshire, jeopardizing convenience stores and other small businesses.
Additionally, cigarette smuggling could increase and put pressure on law enforcement agencies, Phelps predicted.
“We don’t want our product associated with illegal activities,” he said.
Cigarettes in Canada are more expensive than they are in Maine, even with the proposed tax increase.
But Phelps said the company’s biggest concern is for overburdened Maine consumers, who already pay among the highest cigarette taxes in the country. If Baldacci’s proposal is approved, he said, 64 percent of the cost of a pack of cigarettes here would go to fill state and federal government coffers.
“It is unfair to ask one segment of the population to shoulder such a disproportionate share of the tax burden,” he said.
Phelps did not speak to legislators on his trip to Maine, but a report from the conservative Maine Heritage Policy Center was provided to lawmakers the day before his visit and made many of the same points.
Becky Smith of the Maine Coalition on Smoking or Health said Friday that budget projections take into account the likelihood of dwindling revenues over time as more smokers kick the habit after a hefty tax increase.
Smith, whose organization has proposed an even steeper increase — $1.50 a pack — said she is less concerned with raising revenues than with persuading Mainers to stop smoking and helping prevent youngsters from taking it up in the first place.
“As people smoke less, health costs will go down and we won’t need the revenues as much,” she said.
Smith said most Mainers live too far from the New Hampshire border to take their business there and added that tobacco companies have predicted the downfall of convenience stores with every tax increase.
“As far as I know, most if not all of them are still in business,” she said. New Hampshire cigarette sales are much more responsive to tax increases in population-dense Massachusetts, she said.
Rep. Jeremy Fischer, D-Presque Isle, said Friday that it doesn’t make sense to think that tobacco companies have the interests of Maine residents or businesses at heart.
“It has to make you wonder about the honesty of their arguments,” he said.
Still, Fischer, who co-chairs the Appropriations Committee, acknowledged that the tobacco tax is very unpopular with Republican legislators and potentially divisive at a time when committee members are striving to arrive at a unanimous endorsement of the budget bill.
Because negotiations are expected to last beyond April 1, the final budget bill must be approved by a two-thirds majority in both the House and the Senate.
“I agree with Republicans that we must look for ways to streamline costs,” Fischer said. Efforts to consolidate school costs and restructure payments in the Medicaid program will result in some efficiencies. “But if we can’t find what we need, we’ll have to raise revenues,” he said.
The tobacco tax is very much on the table, Fischer said, “but it’s very unlikely we’ll get the whole dollar.”
Higher tobacco tax saves lives, yields steady revenue
March 5, 2007
It’s understandable if tobacco lobbyists have to resort to making things up when it comes to a higher tax on cigarettes. The truth just isn’t on their side.
This week, the Legislature will take up the question of whether to raise Maine’s cigarette tax by $1 a pack. The increase would bring the tax to $3, the highest levy by any state.
The tobacco lobby is gearing up to fight the increase, but it has little to build its arguments on.
Higher tobacco taxes have been shown to cut the rate of smoking, especially among young people. The Campaign for Tobacco Free Kids says the tax would convince 6,100 adults to quit and deter another 10,300 children from taking up the habit. Given that one in three smokers will die prematurely as a result of the habit, lawmakers can save as many as 5,400 lives by raising the tax.
Some of the arguments against the tax are suspect; others are just plain wrong.
It is true that smokers as a group have lower incomes than the general population, but that also means low- and moderate-income people will likely benefit the most from the tax because they would be more likely to quit because of the cost.
The notion that the revenues generated by a tobacco tax are unstable is a falsehood. In fact, the impact of a higher tax on smoking rates tends to fall very close to predictions. And tobacco tax revenues are one of the most stable sources of state income.
From 2002 through 2005, for instance, the tobacco tax brought in a low of $96.3 million and a high of $98.4 million. In that same period, individual income-tax receipts fluctuated from $1.06 billion to $1.27 billion. Sales taxes varied from $836 million to $917 million.
Higher tobacco taxes cause people to quit but also provide a steady and highly predictable source of state revenues. Lobbyists who say otherwise are just blowing smoke.
Activists want Baldacci to raise cigarette tax by $1.50 per pack
March 05, 2007
Glenn Adams
Glenn Adams
AUGUSTA, Maine –A coalition of health groups Monday said Gov. John Baldacci’s proposed $1-per-pack increase in Maine’s cigarette tax is too low and called for a $1.50 increase, which would give Maine far and away the largest state cigarette tax in the country.
The coalition said the $1.50 increase over Maine’s current $2-per-pack tax would help to achieve its goals of reducing Maine’s smoking rate even further and saving millions of dollars in health care costs.
“I welcome the coalition saying we could go to a buck and a half,” Baldacci said in response to the coalition’s proposal.
The Maine Coalition on Smoking or Health, which includes more than 50 organizations, said the $1.50 tax increase on top of the $2 already charged would lower the number of packs sold in Maine by nearly 22 million per year as 9,200 adults quit and 2,400 adult smoking-related deaths are avoided.
The coalition said the figures for youths are even more telling: It estimates that an 18 percent decline in the youth smoking rate resulting from a $1.50 increase would avoid 4,900 future smoking-related deaths because of the thousands who find the habit too expensive to take up.
“Maine needs to raise the tax by $1.50 as soon as possible,” said coalition director Becky Smith.
Even the $1 per pack increase sought by the governor would give Maine the nation’s highest cigarette tax. The $1 increase was already opposed by legislative Republicans, and the $1.50 “would trigger a black market the likes of which we’ve never seen before,” warned Jay Finegan, communications director for the House GOP caucus.
He said cooperatives in which people pool money to buy bulk quantities in other states are already appearing.
“It is a very regressive tax, especially when people are being stressed to pay for heating oil,” Finegan said.
The top Democrat in the House, Speaker Glenn Cummings of Portland, who in January dismissed a $1 increase as a “very unlikely political reality,” said Monday that there is support among Democratic lawmakers for an increase in the cigarette tax.
“We just held public hearings on the significant cuts we are already making in health care and mental health services for our seniors and families, and the impact is tremendous,” Cummings said. “The conversation now is really in the hands of the lawmakers who are saying they are unwilling to support the cigarette tax increase. They need to put forward an alternative in order to close this budget.”
Baldacci submitted his proposed $1 cigarette tax as part of his $6.4 billion two-year budget proposal. The $1 tax would raise about $66 million per year, while the $1.50 tax would raise $90 million.
“We want to send a strong message to the tobacco industry that Maine is serious about reducing smoking,” said Baldacci. “This is a long-term effort to reduce smoking in Maine and to address the costs placed on the health care system by tobacco.”
The Maine Medical Association, one of the anti-smoking coalition’s members, said it supports the $1.50 increase, even if revenues are not limited to health-related programs, because tobacco remains Maine’s No. 1 killer. Every pack of cigarettes sold results in $7 in medical costs, said Gordon Smith, MMA’s executive vice president.
MMA’s Smith dismissed earlier statements that the $1 proposed tax increase lacked political support, saying other proposals that seemed “dead on arrival” when they were proposed “are revived in the middle of the night” when lawmakers search for revenues to balance the state budget.
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Industry tries to fire up foes of cigarette tax hike
By ANN S. KIM, Staff Writer? Friday, March 2, 2007
By ANN S. KIM, Staff Writer? Friday, March 2, 2007
TO VOICE YOUR OPINION
WHAT: Public hearing before the Appropriations and Financial Affairs Committee
WHEN: 2 p.m. Tuesday
WHAT: Public hearing before the Appropriations and Financial Affairs Committee
WHEN: 2 p.m. Tuesday
WHERE: Room 228 of the State House
TODAY: All public hearings at State House are postponed.
AUGUSTA – The tobacco industry has launched its fight against a proposal to give Maine the nation’s highest cigarette tax.
Lawmakers next week are scheduled to begin debating Gov. John Baldacci’s proposal to raise the tax from $2 to $3 a pack, although Democrats and Republicans say legislators are unlikely to approve such an increase.
Philip Morris USA and R.J. Reynolds Tobacco Co. are mobilizing cigarette wholesalers and retailers to oppose the bill. Philip Morris has provided convenience stores with pamphlets urging smokers to oppose the tax. And a public relations firm for the company is contacting reporters to arrange interviews with tobacco executives.
The proposed increase, which would generate an estimated $65 million a year, is part of Gov. John Baldacci’s two-year, $6.4 billion budget.
This year, at least 18 states are considering tobacco tax increases, according to the National Conference of State Legislatures. Although taxes have topped the $3 mark in a handful of cities because of a combination of local and state taxes, Maine would be the first to reach that threshold with its state tax.
The debate comes at a time when tobacco carries a greater stigma and the industry is less influential, said Rep. Sean Faircloth, D-Bangor, who supports the tax increase and served in the House in the 1990s.
“To be blunt, (the tobacco industry) had more strength back then,” Faircloth said. “I think the societal viewpoint has evolved.”
Rep. H. Sawin Millett Jr., R-Waterford, said he has been hearing concerns from store owners who fear the increase will drive customers over the border into nearby New Hampshire, where the tax is 80 cents per pack. Millett, an opponent of the $1 increase and the committee’s ranking minority member, said he has yet to hear from the tobacco industry.
“I don’t think they’ve fully marshaled their forces yet,” possibly because it’s still early in the process, he said.
Another reason may be that the industry believes there is little chance a full dollar increase will pass, he said.
Leadership for the Democrats, who enjoy a majority in the House and the Senate, has said there doesn’t appear to be enough support among party members to pass a $1 increase. Republicans have criticized the approach, saying the solution is to control spending rather than raise taxes.
The tobacco industry will have to latch on to an anti-tax sentiment to make its case, said Sen. Karl Turner, R-Cumberland. “I think it’s fair to say they’re not the most popular industry,” he said. “What’s the benefit of making cigarettes more affordable? It’s a tough sell.”
The Campaign for Tobacco-Free Kids predicts a $1 increase would result in 6,100 adults quitting and a decrease in youth smoking of 12.2 percent, or about 10,300 children, said Kevin O’Flaherty, the organization’s Northeast regional director.
The tobacco industry has not been as aggressive as in the past about fighting cigarette taxes in the region, O’Flaherty said, but he expected that the prospect of Maine passing the highest state tax may warrant extra attention.
Philip Morris USA opposes excessive cigarette taxes such as the one proposed in Maine, said Bill Phelps, the company’s media affairs manager. He said the determination of what was excessive depended on a number of factors, including the current tax.
“We think excessive cigarette taxes really can cause more problems than they solve. It can have a host of unintended consequences,” Phelps said.
Both Philip Morris and R.J. Reynolds say excessive taxes can drive people to states with lower taxes or to the Internet, where taxes may be illegally evaded, and also lead to smuggling. They argue that such taxes are unfair to smokers who are already heavily taxed, and that governments shouldn’t rely on such an unpredictable revenue source.
The tobacco industry needs to frame the debate around taxes rather than health, said Dennis Bailey, president of Savvy Inc., a Portland-based public relations agency. And with Democrats in control of the Legislature, it needs to stress the regressive nature of the tax, he said, explaining how he would advise the industry.
“They’ve got to get the point across that it’s going to hit the poorest members of the public the hardest,” he said. “That will probably persuade some people.”
The median household income for smokers in Maine is $29,493, compared with $44,195 for non-smokers, said John Singleton, director of communications for R.J. Reynolds.
At Capitol Mini Mart, down the street from the State House in Augusta, a Philip Morris flier urged customers to call lawmakers. Cigarettes account for about 40 percent of the store’s business, said Hakan Dinler, the owner. His business will be in jeopardy if 20 percent of his customers quit or go elsewhere for smokes.
“I tell them this is ridiculous,” Dinler said of the lawmakers who come through his store. “Any tax is too much.”
Lawmakers next week are scheduled to begin debating Gov. John Baldacci’s proposal to raise the tax from $2 to $3 a pack, although Democrats and Republicans say legislators are unlikely to approve such an increase.
Philip Morris USA and R.J. Reynolds Tobacco Co. are mobilizing cigarette wholesalers and retailers to oppose the bill. Philip Morris has provided convenience stores with pamphlets urging smokers to oppose the tax. And a public relations firm for the company is contacting reporters to arrange interviews with tobacco executives.
The proposed increase, which would generate an estimated $65 million a year, is part of Gov. John Baldacci’s two-year, $6.4 billion budget.
This year, at least 18 states are considering tobacco tax increases, according to the National Conference of State Legislatures. Although taxes have topped the $3 mark in a handful of cities because of a combination of local and state taxes, Maine would be the first to reach that threshold with its state tax.
The debate comes at a time when tobacco carries a greater stigma and the industry is less influential, said Rep. Sean Faircloth, D-Bangor, who supports the tax increase and served in the House in the 1990s.
“To be blunt, (the tobacco industry) had more strength back then,” Faircloth said. “I think the societal viewpoint has evolved.”
Rep. H. Sawin Millett Jr., R-Waterford, said he has been hearing concerns from store owners who fear the increase will drive customers over the border into nearby New Hampshire, where the tax is 80 cents per pack. Millett, an opponent of the $1 increase and the committee’s ranking minority member, said he has yet to hear from the tobacco industry.
“I don’t think they’ve fully marshaled their forces yet,” possibly because it’s still early in the process, he said.
Another reason may be that the industry believes there is little chance a full dollar increase will pass, he said.
Leadership for the Democrats, who enjoy a majority in the House and the Senate, has said there doesn’t appear to be enough support among party members to pass a $1 increase. Republicans have criticized the approach, saying the solution is to control spending rather than raise taxes.
The tobacco industry will have to latch on to an anti-tax sentiment to make its case, said Sen. Karl Turner, R-Cumberland. “I think it’s fair to say they’re not the most popular industry,” he said. “What’s the benefit of making cigarettes more affordable? It’s a tough sell.”
The Campaign for Tobacco-Free Kids predicts a $1 increase would result in 6,100 adults quitting and a decrease in youth smoking of 12.2 percent, or about 10,300 children, said Kevin O’Flaherty, the organization’s Northeast regional director.
The tobacco industry has not been as aggressive as in the past about fighting cigarette taxes in the region, O’Flaherty said, but he expected that the prospect of Maine passing the highest state tax may warrant extra attention.
Philip Morris USA opposes excessive cigarette taxes such as the one proposed in Maine, said Bill Phelps, the company’s media affairs manager. He said the determination of what was excessive depended on a number of factors, including the current tax.
“We think excessive cigarette taxes really can cause more problems than they solve. It can have a host of unintended consequences,” Phelps said.
Both Philip Morris and R.J. Reynolds say excessive taxes can drive people to states with lower taxes or to the Internet, where taxes may be illegally evaded, and also lead to smuggling. They argue that such taxes are unfair to smokers who are already heavily taxed, and that governments shouldn’t rely on such an unpredictable revenue source.
The tobacco industry needs to frame the debate around taxes rather than health, said Dennis Bailey, president of Savvy Inc., a Portland-based public relations agency. And with Democrats in control of the Legislature, it needs to stress the regressive nature of the tax, he said, explaining how he would advise the industry.
“They’ve got to get the point across that it’s going to hit the poorest members of the public the hardest,” he said. “That will probably persuade some people.”
The median household income for smokers in Maine is $29,493, compared with $44,195 for non-smokers, said John Singleton, director of communications for R.J. Reynolds.
At Capitol Mini Mart, down the street from the State House in Augusta, a Philip Morris flier urged customers to call lawmakers. Cigarettes account for about 40 percent of the store’s business, said Hakan Dinler, the owner. His business will be in jeopardy if 20 percent of his customers quit or go elsewhere for smokes.
“I tell them this is ridiculous,” Dinler said of the lawmakers who come through his store. “Any tax is too much.”
The tax on packs
January 26, 2007
As much as Maine celebrates its falling rate of smokers, Gov. John Baldacci’s budget shows the extent to which the state depends on them continuing their habit. He is proposing a $1-per-pack tax increase on cigarettes to raise an additional $130 million over the biennium. Democratic leaders are saying this isn’t likely, marking the second time recently that this added tax has potentially come and gone.
It’s time for Maine to take a broader view of what it wants from tobacco.
Taxing cigarettes usually is a safe way of raising revenue because most people (75 or 80 percent) don’t smoke, and taxing the minority is politically more expedient than taxing the majority; smoking is seen as an optional habit, though the extensive anti-smoking infrastructure in every state suggests the opposite; and smokers who depend on public health care services are accused of generating more costs than they deliver in tobacco tax revenues, even though the budgets of few other government services are balanced this way.
The argument that raising the price of cigarettes causes people, especially price-sensitive young people, to quit smoking may be true. But if it is, raising taxes as high as possible while not relying on a single penny of revenue from tobacco is the only sensible course for the state. But the administration is doing neither.
The money would go into the General Fund, with about 5 percent identified for smoking cessation and the rest up for grabs, though the increase in K-12 education funding could use all of it and more. A reason these spending options are available, however, is that the governor chose to ignore his own commission’s recommendations on funding his Dirigo Health program. It too wanted to use sin taxes — alcohol as well as tobacco — to meet the governor’s desire to end an insurance-company payment to Dirigo that was making his life unpleasant.
Dirigo got nothing, and now the governor’s budget faces an obvious problem. When asked this week about the $1 increase, which would give Maine, at $3 per pack, the highest tax of any state, House Speaker Glenn Cummings and Senate President Beth Edmonds said they did not think it could pass, and would have particular trouble in the closely divided Senate. That is primarily because leadership wants the budget to pass by a vote of two-thirds of the Legislature, giving both parties the responsibility of presenting a strong spending plan for the state. But Republicans have little to gain by agreeing to higher taxes, even those on tobacco.
There is little sympathy among nonsmokers about the high cost of cigarettes, but that doesn’t mean smokers should be targeted at tax time. In fact, it puts an added responsibility on lawmakers to treat smokers fairly. The governor and legislators would do well to examine what they want from a cigarette tax, where they want it to rank compared with other states, and how, if at all, the money it raises should be spent given the possibility the revenues could dry up.
There’s nothing wrong with taxing this dangerous product, but it shouldn’t be seen as Maine’s Tobacco Treasury.???????????
Support for cigarette tax goes up in smoke
January 24, 2007
AUGUSTA – The top two leaders of the Maine Legislature told reporters on Wednesday that Gov. John Baldacci’s proposal to raise the cigarette tax by $1 a pack has failed to win enough support to pass.
The comments by House Speaker Glenn Cummings and Senate President Beth Edmonds were an early jolt for the governor, who unveiled his budget blueprint for fiscal 2008 and 2009 less than three weeks ago.
A spokesman for Baldacci said the governor would not be making a public response.
Committee deliberations on the two-year spending package containing the proposed increase have not yet begun. Edmonds and Cummings, who offered their warning at an informal and wide-ranging media session, did not rule out the possibility of legislative approval of a smaller hike.
Maine proposal one of many tobacco tax increases being considered
January 14, 2007
David Sharp
David Sharp
LEWISTON, Maine –Standing behind a counter with Zippo lighters on display and a sign overhead displaying cigarette specials, Tonya Medlen didn’t mince words about Gov. John Baldacci’s proposal to raise taxes on cigarettes.
The Democratic governor’s plan to raise the state tobacco tax by another dollar — to $3 per pack — would raise $130 million over the next two years.
“I think he’s whacked,” Medlen said while ringing up sales at Victor News. “Our cigarettes just went up, and he wants to raise them again?”
Maine smokers can’t help feeling that they’re under assault. The state outlawed smoking in the few public places where it was allowed — bars and pool halls — in 2004. A year later, the tobacco tax was increased by a dollar per pack.
Now Baldacci wants to raise the tax again.
If the new increase is approved, the state tax would grow to $3 on July 1. That would be the highest in the nation among states.
New Jersey currently has the highest state tax at $2.58 per pack. A couple of places are as high or even higher when state and local taxes are included. New York’s combined tax is $3 per pack and in Chicago it’s $3.66, according to the Campaign for Tobacco-Free Kids. Those figures don’t include the federal tax of 39 cents per pack.
Health officials like Baldacci’s proposal, which is accompanied by a $1 million increase in funding for smoking cessation programs.
“Raising tobacco taxes is one of the most effective statewide public health strategies,” said Dr. Dora Anne Mills, the state’s top health officer. “People do tend to cut down or quit in response to the increase in price.”
Even at $3, the state tax would not come close to covering the $7 in direct health care costs associated with each pack sold, not to mention the human toll of 2,400 premature deaths each year in the state, Mills said from Augusta.
“The size of a small town in Maine is dying too early because of tobacco and many more thousands of Mainers suffer from chronic disease,” she said.
Ed Miller, executive director of the Maine Lung Association, said the previous $1-per-pack tax increase led to many Mainers deciding to quit.
In 2005, 6.6 percent of Maine’s 210,000 adult smokers were assisted in quitting by the Center for Tobacco Independence, which operates a health line, said Dr. Susan Swartz, the director. That compared to 3.4 percent the previous year, she said.
“There was a large percentage of smokers who took advantage of that tax increase to say, ‘That’s it. I’m done,'” Miller said.
Maine isn’t alone in trying to increase tobacco taxes. There are efforts afoot in at least a half-dozen other states to raise taxes this year.
–Iowa Gov. Chet Culver wants to raise the cigarette tax by $1 per pack.
–Oregon Gov. Ted Kulongoski wants to raise the tax by 84 cents.
–South Carolina Gov. Mark Sanford wants to raise the tax by 30 cents.
–Indiana Gov. Mitch Daniels wants to raise the tax by at least 25 cents.
–Maryland health activists want to raise the tax by $1 per pack.
–Mississippi lawmakers will again consider increasing tax despite vetoes last year.
South Carolina’s state cigarette tax of 7 cents is currently the nation’s lowest, according to the Campaign for Tobacco-Free Kids. Other low state tax rates are 17 cents per pack in Missouri, 18 cents in Mississippi and 20 cents in Tennessee.
In Maine, some worry that higher taxes will simply send more people to the Internet for mail-order cigarettes. Or smokers could simply cross the border into New Hampshire, where the state tax is 80 cents per pack.
Mills isn’t overly concerned. The high cost of gas would likely offset the benefit of traveling to New Hampshire for cigarettes, and the cigarette taxes are comparable or higher in neighboring Canadian provinces, she said.
So far, there’s no organized opposition to Baldacci’s proposal, but Republicans don’t like the idea of raising taxes.
“We cannot accept as a Republican caucus that this budget has to be balanced by tax increases on the backs of any one particular class of Mainers,” House Minority Leader Josh Tardy, R-Newport, said.
But, he added, it’s early in the budget process and Republicans and Democrats have to work together. “Therefore I think it’s way too early for anyone to be drawing lines in the sand,” Tardy said.
The governor’s proposal further cements Maine’s reputation as a place that’s taking aggressive action when it comes to tobacco use.
Last year, Maine became the first state to win a perfect score from the American Lung Association thanks to efforts to provide smoke-free environments, to raise the cigarette tax and to keep minors from smoking. It received a perfect score again this year.
Just last week, the city of Bangor adopted an ordinance that makes it illegal for motorists to smoke with children in the car.
Among advocates of steeper tobacco taxes, the theory is that for every 10 percent increase in taxes there is an overall reduction in smoking of 4 percent, said Peter Fisher of the Campaign for Tobacco-Free Kids in Washington, D.C.
Many smokers seemed resigned to the fact that the public tide has turned against them. That doesn’t mean they’re happy about it.
At Victor News in Lewiston, many customers expressed Medlen’s sentiment that it’s time for the state to target something besides cigarettes.
“I think it’s terrible. It’s time to pick on someone else,” said Peggy Rowe, a Victor News customer who’s trying to quit smoking.
Others were OK with Baldacci’s proposal. “I hope it goes up enough to discourage my daughter from smoking,” said Jim Lysen, who does not smoke. His daughter, a student at Hofstra University in New York, picked up smoking while touring Europe with a friend.
Another Lewiston resident, Richard Whitney, said some people, his father included, will continue to smoke no matter how high the tax goes. Some of those people are those who can least afford to be spending money on cigarettes, he said.
“It could go to $10 per pack, and they would still smoke,” he said. “They’ll stop buying everything else to buy their cigarettes.”
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