Senate committee OKs 50-cent per pack cigarette tax hike

COLUMBIA -- A Senate committee has approved a 50-cent per-pack increase in South Carolina's cigarette tax, using the money to expand health insurance programs for low-income families and children.

While committee members generally agreed about raising the lowest-in-the-nation cigarette tax, members were split about how to use the estimated $159 million raised.

A plan in the works for months to provide tax credits to purchase health insurance was scrapped. Lawmakers instead chose to expand Medicaid programs, which in many cases receive a 3-to-1 match of federal money.

The bill heads to the full Senate with little consensus about the plan. But advocates of raising the tax are pleased the bill has survived.

"The argument is not raising the cigarette tax; the argument is how to spend it," said Robbie Kerr of the Covering Carolina Coalition, a group of anti-smoking and health care advocates pushing for the insurance tax credit plan.

During Finance Committee debate, the bill was assaulted from all sides. It passed on a 14-8 vote.

Democrats said the tax credits a minimum of $475 would do little to make a $4,000 to $5,000 annual health insurance plan affordable. Under the plan, only those earning $20,800 or less twice the federal poverty level were eligible for the tax credits and only if they had been uninsured for a year or longer.

"That's not going to buy any kind of meaningful policy," said Sen. John Land, D-Clarendon. "If they can't afford it now, they couldn't afford it with that kind of policy."

Others questioned why the state would raise a tax. Sen. John Courson, R-Richland, argued the money should give an income tax refund to state taxpayers.

The tax also is indexed for health care inflation, which means the tax would increase every year. Sen. Nikki Setzler, D-Lexington, said he supported the tax, but not the automatic annual hike.

In addition, Department of Health and Human Services executive director Emma Forkner warned the committee that changing Medicaid-related plans could cost more than expected. When the state expanded a children's health care program last year, Forkner said, many who applied learned the entire family qualified for Medicaid.

The approved proposal would expand Medicaid by $511 million dollars.

It is unclear whether the bill will become law this year.

Senators are divided over how to spend the money. Gov. Mark Sanford has threatened to veto any plan that does not cut taxes as much as they are raised.

The full Senate likely will begin debating the bill next week, but that could be interrupted by state budget debate.

"I want to see the cigarette tax go up so we can cut down on youth smoking," said Senate Finance chairman Hugh Leatherman, R-Florence. "It will have tough sledding, I'll tell you that right now."