Opinion: A Tax Whose Time has Come

by Attorney General Chris Koster

Like you, I am against raising taxes in Missouri, particularly in a weak economy. But there is one exception whose time has come – Missouri’s cigarette tax. The Missouri General Assembly should give Missourians a chance to vote on a moderate cigarette tax increase.

The current situation is well-known. Missouri has the lowest cigarette tax among the 50 states, at 17 cents per pack – a rate established almost twenty years ago. The highest cigarette tax state, New York, places a levy of $4.35 on each pack. The 25^th highest cigarette tax state, Iowa, places a tax of $1.36 on each pack. Even tobacco-producing states like South Carolina and Kentucky have higher cigarette taxes than Missouri.

Public policy favors a cigarette tax that places Missouri somewhere in the middle, at around 90 cents per pack. This change would create approximately $400 million annually in new revenue.

The current budget and health problems facing our state are equally well-known. Missouri spends more money under Medicaid to provide health care for smoking-related illnesses than we collect from the entire cigarette tax. In 2004, the Centers for Disease Control estimated that tobacco-related illnesses cost our state’s Medicaid program $532 million, and these costs have only skyrocketed with inflation. Yet, Missouri collected just $90 million last year in cigarette taxes.

Viewed through this lens, the General Assembly is subsidizing sick smokers more than $400 million annually. Under current tax law, Missouri has become an enterprise zone for cigarettes. I’m a strong supporter of enterprise zones, but not for cigarettes.

To our legislative leaders, I would say this: The cigarette tax is going to increase. Missouri will not remain in 50^th place for very much longer.

I propose raising the cigarette tax by 73 cents per pack, placing Missouri 33^rd out of 50 states. The $400 million in new revenue should be directed to building Missouri’s educational infrastructure, with particular emphasis on higher education, and addressing our state’s health care needs. Such a proposal should be placed before the people next November, so that Missourians themselves may decide.

This plan addresses two important goals:

First, the proposal addresses a serious public health issue. Missouri has the 2nd highest smoking rate per capita in the country. Many people addicted to smoking begin in their teenage years. Alarmingly, almost 19% of Missouri high school students smoke cigarettes. Using increased revenue to treat smoking-related illnesses and to promote cessation programs not only prevents premature deaths in our state, but makes compelling economic sense.

Second, it addresses the devastating funding cuts visited on Missouri’s colleges and universities over the last 10 years. Adjusted for inflation, Missouri’s higher education system has been cut by 34% since 2001.

Fifteen years ago, the Missouri Attorney General’s Office settled its landmark case against Big Tobacco. That settlement marked the turning point in public sentiment regarding smoking-related risks, and it has brought over a billion dollars into Missouri’s General Revenue fund over the last decade. Nonetheless, because Missouri’s cigarette tax is the lowest in the nation, our state’s smoking-related health challenges remain among the country’s highest.

The General Assembly should take action before the people are forced to act on their own behalf through the initiative process. Our state should utilize this money in a way that improves public health, promotes education, and provides real economic benefit for our citizens. To miss this opportunity is to fail in our responsibility as elected leaders of Missouri.