Tobacco Tax Position
Raising Missouri’s Cigarette Tax
October 2016
Women’s Voices has endorsed tobacco tax increases in previous elections. However, our members voted to oppose the two ballot measures for the November 8 election. Each would raise Missouri’s tax from the lowest in the nation, 17 cents per pack. Following is more information.
-Constitutional Amendment 3: Amends the Missouri Constitution to increase taxes on cigarettes each year through 2020, at which point this additional tax will total 60 cents per pack of 20.
Amendment 3, also known as “Raise Your Hand for Kids”, increases taxes on cigarettes each year through 2020, at which point this additional tax will total 60 cents per pack of 20. This amendment also creates a fee paid by cigarette wholesalers of 67 cents per pack of 20 on certain cigarettes. Missouri’s enactment of the Tobacco Settlement resulted in a playing field that is not level between “big” tobacco (such as R.J. Reynolds that supports Amendment 3) and smaller wholesale tobacco companies. This amendment further provides that the funds generated by these taxes and fees shall be deposited into a newly established Early Childhood Health and Education Trust Fund.
Some groups have spoken out against this amendment for language they believe may limit or destabilize future funding for stem cell research or restrict access to abortions.. Some education groups have also criticized the amendment stating it would allow for state money to go to private and parochial schools. Organizations publicly opposing this amendment include Missouri Cures, American Cancer Society, Cancer Action Network, American Heart Association, American Lung Association in Missouri, Missouri Association of Rural Education, Missouri National Education Association, Missouri Retired Teachers Association, and Washington University in St. Louis.
Groups that support Amendment 3 offer research that shows investing in early childhood education is key to children’s success in school and later life. Groups that publicly support Amendment 3 include The Deaconess Foundation, REACH Healthcare Foundation of Kansas City, Children’s Mercy Hospital, the Missouri State NAACP, Metropolitan Congregations United Education Task Force, United Way of Greater Kansas City, Parents as Teachers, Child Care Aware of Missouri, and the Missouri Children’s Leadership Council
Women’s Voices Raised for Social Justice acknowledges that there are valid arguments pro and con. However we believe that the arguments against the amendment outweigh its potential good.
-Proposition A: Amends Missouri law to increase taxes on cigarettes in 2017, 2019, and 2021, at which point this additional tax will total 23 cents per pack of 20.
Proposition A, proposed by Initiative Petition, will amend Missouri law to increase taxes on cigarettes in 2017, 2019, and 2021, at which point this additional tax will total 23 cents per pack of 20. It also increases the tax paid by sellers on other tobacco products by 5 percent of manufacturer’s invoice price and further provides that the funds generated by these taxes shall be used exclusively to fund transportation infrastructure projects.
Women’s Voices Raised for Social Justice believes this proposed increase is insufficient and we need an immediate increase, not an extremely small increase over a 5-year period.
Our general philosophy on raising tobacco taxes:
Women’s Voices generally supports raising the Missouri sales tax on cigarettes. First, we believe Missouri’s fiscal circumstances virtually compel an increase:
- Missouri’s cigarette tax falls far below all other states’. The next lowest state, Virginia, has a tax of 30 cents. In fact, the major tobacco states (Georgia, Kentucky, North Carolina, South Carolina, Tennessee, Virginia) have an average tax of 48.5 cents. Other states average $1.68 a pack, with New York having the highest tax—$4.35. Most states bordering Missouri have significantly higher taxes than the proposed 67 cents. In Arkansas the tax is $1.15; in Illinois, $1.98; in Iowa, $1.36; in Oklahoma, $1.03; and in Kansas, 79 cents. So concerns about losing revenue to border states are not serious.
- Nationally, the estimated health and lost-productivity costs related to smoking total $19.16 a pack (Campaign for Tobacco-Free Kids, Feb. 5, 2015).
- Because of tax cuts, Missouri’s weak general revenue collection continues to reduce funds available for critical public services, especially health and education services. According to the Missouri Budget Project’s November 2014 report, “Missouri’s current budget challenges are just the beginning of a steep…fiscal cliff brought about by additional tax cuts approved by lawmakers this year.” The state faces a revenue shortfall of $1.03 billion in FY 2015, the report projects. These facts indicate that Missouri is falling behind other states in its ability to grow economically, attract businesses, and create jobs.
Second, we believe the goal of public policy should be to support the health of the community.*
- Extensive studies have shown that tobacco taxes reduce smoking and increase the life span and health of the population.
- Smoking increases the risk of heart disease, lung cancer, stroke, and premature death.
- Smokers, especially young people, are likely to reduce their smoking in response to cigarette tax increases, ultimately reducing the number of smokers in the population.
- Some argue that a cigarette tax is regressive (disproportionately affecting the poor because their expenditures for cigarettes take a greater share of their income). But health benefits of a tax increase may be “progressive,” that is, resulting in greater health improvements for low-income people than for others. Studies have found that the poor reduce their consumption more than higher income people when prices go up.
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*Information in this section from: C. Marr and C. Huang, “Higher Tobacco Taxes Can Improve Health and Raise Revenue,” Center on Budget and Policy Priorities, March 19, 2014, www.cbpp.org.)
