This article first appeared in the St. Louis Beacon, Oct. 19, 2012 - In the battle over whether Missouri should remain the state with the lowest tobacco tax in the nation or should increase the tax to raise money for schools and anti-smoking campaigns, the names of the opposing groups say it all:
In this corner, it’s the Missourians for Health and Education, backed by the American Cancer Society and a variety of school and civic groups, pushing hard to raise the state’s cigarette tax to 90 cents a pack from its current 17.
In that corner, it’s the group Enough Taxes Already, funded largely by convenience store owners and small tobacco companies, but – notably – not major cigarette makers who helped scuttle earlier attempts to raise the tobacco tax.
And the names of their websites make the distinction even clearer: Show-Me a Brighter Future vs. No Mo Tax.
As those names indicate, the campaign for Proposition B on next month’s ballot has been basically one of statistics vs. emotion.
Backers of the tax increase have raised a lot more money and have traveled the state to spread the word about how schools and health care would benefit from the estimated $283 million the tax would raise every year. Opponents get their message across on billboards and every time you fill your car with gas, with “Enough is Enough” signs popping up at most filling stations and convenience stores.
And there is clearly little love lost between the spokesmen for each side.
Ron Leone, head of the state’s convenience store association, says of his opponents:
“They are fundamentally anti-tobacco zealots who want to make tobacco illegal. If they could wave a magic wand, they would make tobacco illegal tomorrow.”
Counters Roy Temple, campaign manager for the pro-tax side:
“He can’t win an argument on the merits. Talking about an issue like this with him is like playing whack a mole. Whenever you knock down one of his arguments, he comes up with another one. His tactics in this campaign are dishonest.”
What Proposition B says
The tax increase proposal, which reached the ballot through an initiative petition, would raise the tax on cigarettes by 73 cents a pack. The current tax of 17 cents a pack is the lowest in the nation; taxes in states surrounding Missouri range from 60 cents in Kentucky up to $1.98 in Illinois, which raised its tax earlier this year. The national average is $1.49 a pack.
This is the third time in recent years that such an increase has been on the ballot in Missouri. In 2006, an 80-cent increase lost with 48.6 percent of the vote. In 2002, an increase of 55 cents a pack came closer, garnering 49.1 percent of the vote.
The latest proposition calls for the proceeds from the tax to be divided this way:
- 50 percent to elementary and secondary education
- 30 percent to higher education
- 20 percent to programs for prevention and cessation of smoking
Supporters say that built into the proposition are safeguards that the money for schools would be new money, not money that could then be deducted from general revenue and directed elsewhere.
Projections from proponents of the tax said that the money raised by the increase would prevent more than 40,000 Missouri children from smoking, prompt 33,000 adults to quit and save 22,000 Missourians from premature death related to smoking.
They say each household in the state now pays $565 each year to cover government's costs of smokers with chronic health problems but no insurance. Missouri’s Medicaid cost from smoking amounts to $532 million.
One angle in Proposition B not included in the earlier efforts to raise the cigarette tax requires tobacco makers who are not part of the national multibillion-dollar tobacco settlement reached with states in 1999 to contribute to a fund that reimburses Missouri for some expenses that arise from treating smoking-related illnesses.
Supporters say that loophole has been closed by every other state but Missouri.
Because that provision wipes out an economic disadvantage that big tobacco companies faced relative to the makers of generic cigarettes, the big names have not contributed to the effort to defeat Proposition B as they did to the campaigns against the earlier tax increase proposals.
That change is reflected in the contributions to the campaigns on both sides. Reports this week to the Missouri Ethics Commission showed $4.2 million had been given to the pro-Proposition B side, including a $1.7 million donation from the American Cancer Society. Money given to the opposing side totaled $1.2 million.
Cash on hand as of mid-October was $2.9 million for proponents of the tax hike, nearly $969,000 for opponents.
At a debate last month, candidates for governor came out against the tax increase, with Gov. Jay Nixon saying, “The people have a right to vote on it.”
What proponents say
The coalition in favor of the tobacco tax increase includes a long list of organizations: health-related ones, like the American Cancer Society and the American Heart Association; education-related ones, like the Missouri School Boards Association and the Coordinating Board for Higher Education; and others, like the Regional Business Council, the Missouri Association of Social Workers and chambers of commerce from various parts of the state.
Its campaign is concentrating heavily on children, both in the additional funds that the state's schools would receive and in the smoking prevention and cessation programs funded by the tax.
Temple, the campaign manager, said earmarking that money for schools is a fundamental difference from the earlier, unsuccessful attempts to increase the tobacco tax.
“Obviously we are in a different budget situation than in previous years,” he said. “People know that there are needs going unmet in the state budget, and we think they will have an appetite for this.”
He noted that one of the big items that has prompted Missouri’s budget squeeze is the amount the state has to pay for Medicaid costs related to smoking. “So voters will be able to choose whether they want that dynamic to continue,” Temple said.
Plus, he said, the provision that would erase the distinction between big tobacco and companies that make off-brand cigarettes should also appeal to voters’ sense of fairness.
“Regardless of what brand you attach to the label,” he said, “the same harm flows from tobacco products. Currently, some tobacco companies enjoy special benefits, even though their products cause the same harm. Right now, those people are getting in effect a special subsidy.”
Temple said the money from the tax that is set aside to prevent smoking and help people quit would be used on efforts shown to work elsewhere. He denies that the American Cancer Society, a leader in the Prop B effort, would benefit from the funds.
“It’s hard,” he said, “so you want to spend that money on stuff that is proven effective. That is what the provisions for spending on cessation and prevention are designed to do. It is just scare tactics to suggest that it somehow benefits the cancer society.”
Asked whether the safeguards in the proposition are strong enough to make sure that revenue from the tax increase would go to the schools as intended, Temple argued strongly against any such concerns.
“You put something in the law,” he said, “and your safest assumption is that people will comply with the law. This idea that cynics who oppose this measure are trying to create scare tactics that will cause people not even to try to improve things is cynicism at its worst.”
If lawmakers try to make any changes to what voters approved, he added, “the legislature should be held accountable. The ultimate safeguard in a democracy is the ballot box. You have to be prepared to hold them accountable if they don’t execute on this.
“To suggest you should not do this because someone might do something wrong is silly. If someone robs banks, it’s not a reason not to have banks.”
What opponents say
Even though Leone, executive director of the Missouri Petroleum Marketers and Convenience Store Association, has been the very public face of the opposition to tobacco tax increases, he wants to make one thing clear.
He is not against raising the tax; he is against an increase as large as what is in Proposition B, what he routinely calls the largest tax increase in the history of the state.
“I hate it when people try to characterize me as someone who says ‘no no no’ all the time,” Leone said. “We’re not against all taxation and regulation. We are against outrageous and unfair taxation and regulation.
“We supported a 100 percent tax increase on tobacco in the last session” of the legislature, he said. He said he wouldn’t negotiate in public about just how large a tax hike his group would be willing to favor, but the overall principle is making sure his members aren’t at a competitive disadvantage.
“There are a lot of reasons we think Proposition B is bad for consumers, bad for small business owners and bad for all taxpayers,” he said. “It comes down to the fact that even if you are pro-education, and most of us are, you can still vote no on Prop B because it’s too big and too dangerous for Missouri.
“People from other states would stay home and spend their money in their own states instead of ours. That means businesses will close if Proposition B passes and people will be laid off if Proposition B passes.”
To bolster his case, he cites research commissioned from Joseph Haslag, an economics professor at the University of Missouri-Columbia, who concluded that Missouri revenue will be reduced by $67.7 million a year if Proposition B wins approval because of reduced taxes from reduced sales. In St. Louis and St. Louis County, the estimated loss in sales tax money is more than $4.6 million.
“We think Joe’s numbers are really a floor, not a ceiling,” Leone said. “What he couldn’t quantify are all the other products that won’t be sold because people won’t be coming to Missouri to buy cigarettes. They buy other things, they fill up their car. We think it’s tens of millions of dollars higher than that.”
He is also leery of the 20 percent of the proceeds of the tax that will go into a fund for smoking cessation and prevention programs – money he calls a “slush fund and I don’t use that term lightly” -- that would be controlled by unelected bureaucrats.
Finally, he added, he is worried that raising cigarette taxes is just another step by government to make people pay for all sorts of things -- sin taxes run amok.
“I think most people will admit that the nanny state is alive and well in the USA,” Leone said. “All you have to do is read your newspapers. Look at what happened in New York City, where the government is telling people what size sodas people can buy and what size sodas their children can drink.
“We have to stand up at times and say, ‘Enough is enough.’ I think this is one of those times, and Proposition B is one of those issues.”