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Will bump in Florida cigarette tax gain momentum?

TALLAHASSEE — Tobacco-related illnesses cost Florida taxpayers $1.25 billion a year. To offset the cost, two lawmakers are proposing a new state tax on every form of tobacco, from cigarettes to cigars and snuff.

Senate Finance and Tax Committee Chairman Thad Altman, a Republican from Melbourne, and Sen. Ted Deutch, a Democrat from Boca Raton, lent their bipartisan support to a measure that adds a $1-per-pack surcharge to all cigarettes and $1 per ounce for cigars and smokeless tobacco products. The bill will get its first hearing in Altman's committee today.

While Florida collects about $430 million in cigarette taxes, $30 million in smokeless tobacco taxes and nothing from cigars, it spends three times that on treating sick smokers, said Deutch at a news conference.

"This is a staggering gap that is being subsidized by all of Florida's taxpayers," he said.

Altman called the measure, which has the full support of Senate leadership, "a giant step forward for Florida" because it provides tax fairness "by removing the burden currently borne by nontobacco users, and it begins to close the Medicaid gap."

The revenue generated by the new tax, estimated to exceed $900 million, would go to offset the state's bills for Medicaid — including health coverage for poor and elderly smokers — and be used to draw down more federal health care money, the sponsors said.

Florida now charges 34 cents a pack for cigarettes and, beginning Wednesday, the federal government will raise its cigarette tax by 62 cents a pack.

Altman said Florida was currently 47th in the nation in revenue collected to offset tobacco-related health care costs which, by some estimates, amount to $600 per family for tobacco-related illnesses, or $10 per pack.

Deutch said that Florida's deep budget crunch is partly due to the soaring Medicaid expenses.

"Over time, we've let what the state spends on tobacco related illness get way out of balance with what we take in from users of tobacco," he said.

Altman said the ultimate goal is to fill the gap in the short term but reduce smoking in Florida over time, particularly among young smokers who are most sensitive to price hikes.

"We hope it doesn't raise revenue," he said. "We hope it cuts consumption."

While the support for the tobacco tax seems to be widespread in the Senate, the tobacco industry has turned to the House to halt the measure.

Several tobacco lobbyists met Monday with House Speaker Larry Cretul to explain that a better way to generate revenue from smokers is to impose a fee on cigarette companies like Miami's Dosal Tobacco, that were too small to be included in a 1994 lawsuit against Big Tobacco. Those companies were excluded from a resulting settlement agreement in 1997 that forces Big Tobacco to pay millions to Florida for 25 years.

The tobacco lobbyists argued that if the state were to impose a comparable fee on those companies, state coffers could collect as much as $80 million additional money, and also draw down more federal matching money.

Cretul's chief tax deputy, finance and tax chairwoman Ellyn Bogdanoff of Fort Lauderdale, was sympathetic to the lobbyists' argument. Bogdanoff opposes a cigarette tax and told them that if the state raises its cigarette tax, fewer people will buy cigarettes, and that could be bad for retailers.

"Twenty-two percent of all sales in convenience stores are cigarettes," Bogdanoff said.

"We need to look at everything. If they don't go in to buy cigarettes, they don't buy the Coke. They don't buy the chips."

Mary Ellen Klas can be reached at meklas@MiamiHerald.com.

Will bump in Florida cigarette tax gain momentum? 03/30/09 [Last modified: Tuesday, March 31, 2009 7:11am]

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