South Carolina cigarette tax hike gets key approval
COLUMBIA, S.C.—South Carolina's Senate on Tuesday approved an amendment raising the nation's lowest cigarette tax by 50 cents a pack in an effort to raise money for health care programs.
The state's tobacco tax was last increased in 1977.
"It's a workable compromise and a great many South Carolinians will be helped dramatically," Sen. Thomas Alexander, R-Walhalla, said of plans to spend the money on health programs and anti-smoking efforts.
Alexander says the tax, which would raise $159 million, could make health care available to as many as 200,000 residents who don't currently qualify for Medicaid, don't have insurance through their employers or can't afford it.
The proposed 57-cent tax would still only be about half the $1.13 national average, but at least 20 cents more than either Georgia's or North Carolina's tax.
The amendment must go back to the House before heading to the governor's desk. A spokesman said Gov. Mark Sanford opposes raising any tax without a corresponding tax decrease. The Republican governor also opposes using the tax increase to pay for ongoing needs like an expansion of the Medicaid program with rising annual costs.
Senators voted 27-16 in favor of the amendment on Tuesday. Further amendments to the House bill were to be discussed Wednesday by the Senate.
Alexander said that when South Carolina's tax was last raised 31 years ago, cigarettes cost 45 cents a pack, which meant the 7-cent tax was equivalent to 14 percent of a pack's price. With the average South Carolina price now over $3 a pack, the tax is currently less 3 percent of the price.
Alexander's proposal would spend the first $5 million raised on programs aimed at curtailing smoking.
The rest would be split between expanding Medicaid programs and a new private health insurance voucher program.
The money would allow the state to include more families in Medicaid by changing its eligibility requirements. To qualify, a family currently can earn no more than 50 percent of the federal poverty level, but the plan would double the threshold to 100 percent. That means a family of three earning less than $17,600 would be covered under the plan. It would cost about $71 million and cover around 75,000 adults that aren't now covered, Alexander said.
Children of those parents typically already qualify for care under an existing Medicaid program.
The other big chunk of tax dollars would pay for a new non-Medicaid program that would give as much as $2,000 to people on a first-come basis to buy health insurance through their employers or on their own, Alexander said. To qualify, they'd have to earn less than 200 percent of the federal poverty level, or $42,400 for a family of four. But Alexander said the amount offered could vary by factors including age.
The only hitch the proposal faced Tuesday came when Sen. Nikki Setzler, a West Columbia Democrat, questioned plans to index the cigarette tax to medical inflation costs.
"If you're voting for this, you're voting for the tax go up every year," Setzler said, noting that no other state had taken that path.
Alexander said if the state had indexed the tax in 1977, it wouldn't be facing the issues it is today.
Senators easily rejected a plan that would have raised the current 7 cent tax to $1 a pack.
On Wednesday, the Senate will discuss other amendments that include eliminating the indexed tax increase and eliminating plans to put anything into an expansion of Medicaid programs.
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