Tax: VT Antis push for tax increase

Tobacco tax jumps 60 cents

July 1, 2006
PATRICK McARDLE, Staff Writer

BENNINGTON — It was business as usual for stores selling cigarettes and tobacco products on Friday, despite a 60-cent-a-pack increase that begins today.

“Surprisingly, a lot of people don’t realize the price is going up,” said Jim Brown, manager of the Beverage Den in Bennington.

The cigarette tax was part of a compromise reached between Gov. James Douglas and the Legislature over a health care bill. The funding for the Catamount Health program, which was a source of much contention, will be the cigarette tax.

State Sen. Dick Sears, D-Bennington, said he was still unhappy about the plan’s funding.

“I’m concerned we’ve got a health care plan built on a tax that isn’t going to bring in the revenue people expect. I think we’re going to have to revisit that,” he said.

Sears thinks some legislators underestimated how many sales local stores would lose. Because his district is in the southwest corner of the state, near the New York and Massachusetts borders, Sears said he’s very aware that many people in adjoining states are coming to Vermont to buy cigarettes.

The current cigarette tax in New York is $1.50 a pack, and Massachusetts charges $1.51 a pack. The Vermont tax will be $1.79 with the July 1 increase, and it is scheduled to go up an additional 20 cents in July 2007.

Douglas’ spokesman Jason Gibbs said the governor stood by the decision to use the cigarette tax to fund health care.

“The governor is never particularly enthusiastic about any new taxes, but this one is the least problematic and in line with certain public health policies,” Gibbs said.

Douglas hopes the increased cost will decrease smoking and, in turn, reduce health care expenses in Vermont.

Karen Lombard, of Peru, said she thought that was unlikely. A psychologist and a smoker, she was buying cigarettes Friday. Lombard said she didn’t think cost is an effective deterrent.

“For an addictive, soothing drug like tobacco, I don’t think the cost is the most important thing,” she said.

The tax increase is discrimination against smokers, said Karl Harrington of Dorset.

“It’s stupid, completely ridiculous. … I don’t know what idiot up there thought of this,” he said.

Brown said the tax increase may hurt a number of area businesses.

“The state doesn’t realize how much we will lose in general revenue. This will have a huge impact and not just on our business. The people who come here to buy cigarettes also buy gas and eat at restaurants. We’re going to lose all of that,” he said.

Brown’s concerns were backed by Ray Hunt, of Bennington, who was in the Beverage Den to buy cigarettes for his fianc?e in New York.

“Sixty cents a pack? That’s six dollars a carton. There’s really no point anymore in buying them here and bringing them to Albany,” he said.

Not all local businesses showed the same concern. Laurie Constantino, an employee at Next Door Beer and Wine in Pownal, said she didn’t think people were coming to the store just for the price of cigarettes.

“We get people here from Williamstown because we’re so close to the Massachusetts border, and they say they’re just happy for the ride and like the service here,” she said.

Some even think the inconvenience will pay off in the long run. Gwen Hannan, coordinator of Southwestern Vermont Medical Center’s tobacco cessation program, said cost can contribute to the determination to quit.

More importantly, studies have shown a correlation between an increase in cost and a decrease in the number of young people who start smoking.

Lombard, who has been smoking again for five years after quitting for 15 years, doesn’t think those who have already acquired the habit will be so easily discouraged.

“We’ll all probably just go to Indian reservations to buy our cigarettes,” she said with a laugh.

Tobacco and soda taxes under consideration

April 12, 2006
Nancy Remsen

MONTPELIER — Higher taxes on tobacco products, a tax on soda and an assessment on employers for workers who aren’t offered health insurance will be on the table today as the Senate Finance Committee decides how to pay for a health care reform plan.

The plan, which includes a new program called Catamount Health targeted at the state’s 61,000 uninsured residents, would require $12.5 million in new money next year as reforms begin. The cumulative revenue requirement reaches $137.9 million over four years.

The Senate’s tax-writing committee reviewed several combinations of taxes and assessments Tuesday that would generate the money needed.

Senators are hustling to wrap up work on a health reform package as the session moves into its final weeks, but progress toward an agreement with the Douglas administration hit a snag Tuesday.

In a letter to the Senate’s Democratic leadership, Secretary of Administration Michael Smith listed several complaints, including that the bill would increase premiums for Vermonters with private health insurance, while the governor’s plan wouldn’t.

“That is patently inaccurate,” Sen. Jim Leddy, D-Chittenden, said of Smith’s assertion. The bill would reduce some of the costs now shifted to private insurance, which cause premiums to increase, Leddy said. “The administration either doesn’t understand what we did or is ignoring it.”

More disagreements could develop after the Finance Committee settles on a way to pay for the Senate reform package.

Higher tobacco taxes are a certainty, especially because Gov. Jim Douglas said last week that he could accept such a tax increase. The House included a 60-cent per pack increase in the cigarette tax in its health care plan. The Senate Finance Committee looked Tuesday at options to increase the cigarette tax by between 60 and 80 cents per pack and boost taxes on other tobacco products.

Finance Chairwoman Ann Cummings, D-Washington, also suggested a tax on sodas to make up for an expected decline in revenues from tobacco taxes as higher costs discourage new smokers.

The Senate has proposed a new revenue source — an assessment on employers who don’t offer insurance to all or some of their employees.

“We really felt it was important that everyone contribute,” Cummings said. Supporters of the business assessment have argued that some employers gain a competitive edge by not offering health insurance. “If everyone is assessed,” Cummings said, “then nobody is at a competitive disadvantage.”

The committee reviewed four options, all based on $365 a year per full-time equivalent position for workers who weren’t offered health insurance by their employers. The assessment would hit employers who don’t’ offer insurance to any workers and those who offer it only to some workers. The committee also considered assessing employers for workers who are offered insurance, but don’t take it.

The committee also weighed granting exemptions from the assessment to tiny businesses with less than 20, 12, eight or five full-time equivalent job slots, but made no decisions. Cummings said, “The intent is not to put anyone under.”

David Merrill, owner of Ethan Allen Motel in South Burlington, is one of the employers who could be affected by the new assessment. Merrill and his wife, Kendra, have five, sometimes six part-time employees to help with the operation and upkeep of their 26-room motel. They pay for their own supplementary insurance to Medicare, David Merrill said, but they don’t offer any insurance to their workers.

“I don’t think there is anybody in a small business who wouldn’t want to offer insurance,” he said, “but it couldn’t be at the rate of insurance now.”

Merrill worries about all the increased costs he faces — fuel, a property reappraisal and now this assessment. He concluded, “If the tax is reasonable enough, it isn’t going to kill us.”

Richard Huestis owns Huestis Farm Supply in West Bridport and has two employees, his wife who works as bookkeeper and a mechanic. He pays $1,300 a month to provide insurance for himself, his wife and the mechanic.

“I don’t think that assessment is going to level the playing field,” Huestis said. At $365 a head, he noted, “It would be cheaper for me to stop providing insurance, but we will most likely continue what we are doing.”

Contact Nancy Remsen at 229-9141 or nremsen@bfp.burlingtonfreepress.com

Health advocates push cigarette tax increase

February 2, 2006

MONTPELIER, Vt. –Lawmakers are considering raising the state’s tax on cigarettes by 81 cents.

The Coalition for a Tobacco-Free Vermont told lawmakers Wednesday that a new survey indicates broad support for boosting the tax from $1.19 a pack to $2.

“This is a public health initiative,” said Nicole Hamlet, coordinator for the coalition, which includes the Vermont chapters of the American Cancer Society, American Lung Association, American Heart Association and Vermont Medical Society. “High cigarette taxes will reduce smoking for Vermont adults and youth and all the devastation that goes along with it.”

The survey found that 78 percent of voters in Vermont said they would support an 81-cent increase in the tax. The poll, conducted for the coalition by a Washington-based group, showed greater support — 88 percent — for increasing taxes on cigars, chewing tobacco and other tobacco products.

Several lawmakers gathered with the coalition and backed the proposed legislation Wednesday but some leaders in the Legislature were not as supportive.

“This is strong preventive medicine,” Sen. Virginia Lyons, D-Chittenden, said of the tax increase.

The tax would generate $15 million which the coalition has proposed investing in the health care trust fund to help pay for health care.

“The research is clear. When the price of tobacco increases, the use of tobacco goes down,” said Rep. Ann Pugh, D-South Burlington, chairwoman of the House Human Services Committee, which is reviewing the bill. “Our committee will take this up this year.”

The House Ways and Means Committee would also have to review any tax increase plan. Chairman Michael Obuchowski, D-Bellows Falls, who represents a district bordering New Hampshire, said the increase might take away business from Vermont and to New Hampshire where the cigarette tax is about 80 cents per pack.

Maine has a $2 tax, which is the fourth highest cigarette tax rate in the country; Rhode Island has the highest tax rate at $2.64 per pack.

Assistant House Republican Leader David Sunderland of Rutland said he didn’t support using taxes to get Vermonters to quit smoking.

“I wish Vermonters would make the choice not to smoke,” Sunderland said, “but to try to accomplish that goal with taxes — I have reservations. I think we could look at means that don’t pick the pockets of Vermonters.”

Gov. Jim Douglas also is against the tax proposal, his spokesman Jason Gibbs said.