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Tobacco tax update

House bills focus on health care, insurance

by Mary Helen Yarborough
Public Relations
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 Trust Fund.
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 affordability.
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

Editor's 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 tax increase.

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

The Catalyst Online is published weekly by the MUSC Office of Public Relations for the faculty, employees and students of the Medical University of South Carolina. The Catalyst Online editor, Kim Draughn, can be reached at 792-4107 or by email, Editorial copy can be submitted to The Catalyst Online and to The Catalyst in print by fax, 792-6723, or by email to To place an ad in The Catalyst hardcopy, call Island Publications at 849-1778, ext. 201.