State lawmakers have, for some time, been willing to consider increasing the state's lowest-in-the-nation cigarette tax, but have been unable to agree where to go from there. Maybe a new proposal supported by business, medical and insurance leaders will provide a solution.
Last week, a coalition including the S.C. Hospital Association, S.C. Medical Association, S.C. Chamber of Commerce and major health insurers proposed raising the state's 7-cent cigarette tax to at least 50 cents and perhaps as high as 90 cents per pack. The plan would use the additional revenues to extend health care coverage to the 700,000 South Carolinians now without it.
The plan would expand aid to low-income households to make insurance available and affordable. It also would give individuals and businesses with up to 25 employees tax credits as high as $2,500 to help pay for insurance.
The coalition hopes the tax-credit proposal will help persuade opponents of a tax hike, including Gov. Mark Sanford, to go along with the plan. Sanford is reviewing the plan but said he still wants to devote all money gained from hiking the cigarette tax to lowering the state income tax.
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"Any tax increase not offset in its totality is not something we can support," Sanford spokesman Joel Sawyer said last week.
Lawmakers have gone back and forth on what to do with extra revenues generated by an increase in the cigarette tax. Last year, they considered using the revenues to eliminate the state's bottom income tax bracket and to fund a program to deter teen smoking. The remainder would be held in a health-care savings account for future uses.
Supporters of the plan, however, hope to assuage Sanford and lawmakers who have pledged not to raise taxes by allotting half of the revenues for tax credits. They say that represents a tax swap, not a tax hike.
The proposal strikes us as a good compromise. But the most important feature of the plan is that it expands coverage for the hundreds of thousands of South Carolinians who now have none.
We have long endorsed devoting revenues from a cigarette tax hike to meeting the state's considerable health needs. For example, the money could be used, in part, to cover the expansion of the SCHIP program to provide health insurance to more of the state's children.
The budget the governor recently sent to the Legislature would reduce SCHIP funding by $21 million, essentially negating the proposed expansion.
Raising the cost of a pack of cigarettes in itself would help to reduce smoking in the state, especially among teens. The higher price could help prevent many young people from taking up the smoking habit in the first place.
Smoking-related illnesses are responsible for more than $1 billion a year in health-care costs paid by the state, with more than $360 million of that coming through Medicaid. So, reducing the smoking rate not only would save lives but also money.
The new proposal may not be the one that finally brings lawmakers together regarding the cigarette tax. Even its proponents concede that raising the tax by 50 cents or more might be difficult.
But the plan is supported by a diverse coalition of business, health and insurance leaders. And we like the plan's emphasis on using new revenues to expand insurance coverage and make it easier for employees of small businesses to get coverage.
We hope the insistence on an offsetting tax cut is not an insurmountable stumbling block this time. Shouldn't improving health-care options for hundreds of thousands of South Carolinians be incentive enough to increase the cigarette tax?
New plan that expands health insurance might be a workable compromise.
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