Tobacco tax update
House bills focus on health care, insurance
by Mary Helen Yarborough
As a cigarette tax increase gains momentum in the S.C. General
Assembly, ways to spend the projected revenue from the surtax appear to
be converging on more themes related to health.
Two measures introduced in early February would impose surtax on
cigarettes to create a tax that reflects the average tax imposed by
other Southeastern states. The surtax in House Bills (HB) 3486,
introduced by Rep. J.E. Smith (D-Richland); and HB 3470, by Rep. B.R.
Skelton (R-Pickens County); would use a millage calculation to
determine the tax on cigarettes, as well as assessing manufacturers 5
percent of the product’s base price.
The revenue generated from the additional tax (about 40 cents) would
establish a $5 million smoking prevention and cessation trust fund; $1
million for the S.C. Department of Agriculture for marketing
state-grown crops. Half of the remaining annual revenue would fund the
Medicaid Trust Fund, and the other half would go toward the Health Care
Beginning in 2011, revenues would support Medicaid and Medicaid
services and would be restricted to individuals, ages 19-64, living at
the 100 percent poverty level. The funds are supplementary and may not
be used to replace general funds appropriated by the General Assembly
or other funds used to support Medicaid.
A part of the revenue also would be managed by the Department of
Insurance, and underwrite the Palmetto Health Care Safety Net Trust
Fund beginning in 2012.
It also would fund the state’s Children’s Health Insurance Program, as well as the Aged, Blind and Disabled program.
Any excess funds would be distributed through the Palmetto Health Care
Premium Assistance Program, which would be used to provide an average
of $2,000 for qualified individual or small employers to purchase
health insurance, including insurance offered by employers.
This bill also creates a seven-member Study Committee on Health Care
Access and Affordability to review and make recommendations on the
state’s overall health status, the price of health care, the use of
Medicare and Medicaid, the promotion of public and private health care
partnerships, preventative care, the establishment of a high risk
health care pool, the necessity of a reinsurance program, how to
maximize coverage while controlling costs and providing quality care,
and how to improve the state’s overall health and health care
A measure introduced by Rep. Richard E. Chalk (R-Beaufort County),
would create an incentive for South Carolinians to establish and
maintain a health savings account. HB 3471 also would provide a tax
credit for individuals who maintain a qualified health savings account.
The revenue from the bill’s proposed 2.25 cents per cigarette surtax
would be deposited into the General Fund Reserve, which would offset
losses from the proposed $500 maximum tax credit per individual who
maintains a qualified, tax-deferred HSA.
HB 3471 also funds the Community Mental Health fund through the S.C. Department of Mental Health.
All of these bills have been referred to the Committee on Ways and Means.
Spot Q & A
note: Melissa Lacas of the Office of Public Relations interviewed 11
people in the Horseshoe Feb. 12 on the recent federal tobacco tax
increase and the state legislatures plan to also increase the tobacco
tax. Ninety-one percent of those interviewed said they believed that
increasing the cigarette tax will not result in fewer smokers, most
reasoned that smokers are too heavily addicted to quit smoking. On how
the revenue from the tobacco tax increase should be spent, 64 percent
of those interviewed said the money should fund education and schools.
Only two individuals said the money should cover health care costs. All
of those interviewed said that alcoholic beverages also should incur a
How should tax money collected from cigarettes, tobacco products be used?
“It should be used on health care for those who get sick from using tobacco.”
Karen Dixon, Pawley’s Island
“It should go to education and health care.”
Matthew Chao, College of Health Professions
“It should pay for state infrastructure projects such as roads and construction.”
Brandon Mizell, College of Health Professions
What other products or vices should be more heavily taxed?
“Anything that causes additional expenses should be taxed; such as gasoline.”
Randall Watts, Library Services
“More taxes should come from sales of hard liquor, because it has no health benefits.”
Joachim Uys, Ph.D.
How will smokers respond to the federal, proposed state cigarette tax?
“Smokers will be very unhappy. Smokers already pay a lot in taxes.”
Burnadette Greene, West Ashley
“People won’t like it, but won’t stop because they are addicted.”
Michelle Dixon, Pawley’s Island
Friday, Feb. 20, 2009