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S.C. House approves 50-cent increase in cigarette taxes

The S.C. House approved a 50-cent increase to the state's lowest-in-the-nation cigarette tax Wednesday. But lawmakers are uncertain if they have enough votes to overturn an expected veto by Gov. Mark Sanford.

The version approved by the House keeps the basics of a previously approved Senate cigarette tax increase:

The 50-cents-a-pack tax increase would bring in an estimated $136.1 million a year.

The money would go to help pay for Medicaid, the state's health care program for the poor and disabled.

Some money would be set aside for cancer research and smoking cessation.

But the House voted to remove $2.5 million for infrastructure grants along the Interstate 95 corridor, setting up a possible showdown with Senate Democrats who support the spending.

The House also rejected a proposal to reduce the tax increase to 30 cents a pack in hopes of winning the support of lawmakers from border counties. Those legislators worry businesses in their counties could lose business to neighboring states with a lower tax.

Gov. Sanford, who is holding a North Augusta news conference today to discuss the tax, has said he will veto any bill that does not equally cut another tax.

"At 30 cents, the House was very likely to override a veto," said House Speaker Bobby Harrell, R-Charleston. "I'm not so sure at 50 cents."

Lawmakers appealed to principle and practicality throughout the afternoon debate.

Some brought up a $400 million Medicaid budget deficit projected for next year, noting the cigarette tax could help fill some of that hole. Others said they wanted a 50-cent increase but were willing to accept a lower increase to end the decade-long debate about the tax.

"If we stick with 50, we end up with 7," said Rep. Gary Simrill, R-Rock Hill, referring to the current tax of 7 cents a pack on cigarettes.

But Rep. Kris Crawford, R-Florence, an emergency room physician, said the real issue is increasing the cost of cigarettes to discourage youths and adults from smoking. Cigarette tax revenue also could help pay for the state's costs from the new federal health care law.

"People understand that health care beyond our control is now a huge weight around our necks," Crawford said. "Thirty cents is not going to make this go away. I believe 50 cents puts this to bed for a while."

Lawmakers also exchanged figures on the job-related cost of raising the cigarette tax.

Simrill predicted raising the tax higher than Georgia's 37-cent-a-pack tax and North Carolina's 45-cent-a-pack levy will hurt retailers near the border. House Minority Leader Harry Ott, D-Calhoun, countered that $400 million in Medicaid cuts would hurt a lot more doctors and hospitals.

According to Department of Revenue data, South Carolina collected an additional $1.98 million -- a total of $27.7 million -- the year after North Carolina raised its tax to 40 cents a pack in 2005. In 2006, North Carolina raised its tax to 45 cents per pack, and S.C. cigarette revenue declined by $1.1 million.

Since July 1, 1999, S.C. cigarette tax revenue has declined to $26.4 million a year from $27.7 million a year. Both Georgia and North Carolina have raised their cigarette taxes during that period.

The bill now heads back to the Senate, which can agree with the House or send the bill to a six-person conference committee.

Sen. Thomas Alexander, R-Oconee, who helped shepherd the bill through the Senate, said the I-95 money was a key compromise to secure what he called a "fragile" two-thirds majority needed to override a Sanford veto.

What's next?

The cigarette tax's path to passage:

Wednesday, House lawmakers passed their version of the cigarette tax increase -- a 50-cents-a-pack increase -- without economic development money for the Interstate 95 corridor included in a Senate-passed version.

House and Senate lawmakers will have the option of allowing a conference committee of House and Senate members to iron out the differences in the two bills.

Gov. Mark Sanford has said he will veto a cigarette tax increase without a corresponding tax cut. House and Senate lawmakers will have to muster a two-thirds vote in both houses to override the governor.