Sanford Wrong On Cigarette Tax Debate
March 17, 2003
The cigarette tax debate in South Carolina looked like it was six feet under last week until an unexpected announcement made by the governor on Friday.
Although I still think he was the better choice for governor in last yearís gubernatorial election, Gov. Mark Sanfordís proposal favoring an increase in the cigarette tax is puzzling at best and upsetting to many fiscal conservatives who believe that tax increases are not the best way to increase state government revenue. Why, Gov. Sanford, why?
Throughout his campaign for governor last year, Sanford continuously hammered home his belief that eliminating the state income tax would grow the economy and attract new businesses to South Carolina. To the best of my recollection, I never once heard him say anything about raising the cigarette tax as a means for achieving this. But that is exactly what he proposed on Friday.
Gov. Sanfordís controversial plan calls for increasing the tax on cigarettes (not on chewing tobacco, cigars, pipes or snuff, though...can someone please explain that one to me?) to 53 cents a pack to pay for Medicaid and for the possibility of future decreases in the state income tax.
"It's crucial we use the debate on Medicaid funding and the cigarette tax as a way to advance tax changes that will strengthen the economy. Over time, this is a large income tax cut. It's not in this year. It's not in next year. But over time, it's a very significant income tax cut," Sanford said about his plan.
Whoa, whoa, whoa, wait a minute. This quote by Gov. Sanford reminds me of a line in a recent Snickers commercial: Not going anywhere for a while, have a Snickers. Except in this case, it goes like this: Not getting a tax cut for a while, have a tax increase courtesy of the Republican governor of South Carolina!
Did I read that quote correctly? Is Gov. Sanford actually saying that he is unsure whether South Carolina taxpayers will get a reduction in their state income tax until some indefinite time in the future? This is beginning to sound a lot like the 18-year income tax elimination plan he proposed last year that had a lot of Republicans grumbling. The success of that plan depended on the economy improving for the state income tax reductions to be fully implemented. Under that plan, if the economy was down, then state income tax reductions would be postponed indefinitely. In the meantime, other taxes would be increased (he proposed a five cent hike in the gas tax), causing further harm to struggling taxpayers. But that is exactly what Gov. Sanford is proposing to do with this new plan, too.
There is a quandary about how Gov. Sanford wants to reduce the state income tax. Why do taxes need to be increased in order for other taxes to be decreased? Are President Bushís tax cuts coinciding with tax increases in other areas? No! Then why does Gov. Sanford need to increase the cigarette tax to help pay for future state income tax reductions? In the vernacular of todayís youth, this plan is whacked!
Why should cigarette smokers have to bear the brunt of tax liability to insure funding for Medicaid and for possibly lowering state income taxes? Since Gov. Sanford says he is against any tax increase without a simultaneous reduction in another tax, why should he propose a tax increase in the first place?
Funding can and should come from any other source besides a tax increase.
I heard Gov. Sanford trying to explain his cigarette tax plan on the Ralph Bristol Show on Friday. Sanford surmised that increasing the cigarette tax would actually be a tax cut since every dollar raised by the tax increase would be matched by three dollars from the federal government to fund Medicaid.
"By any measure, it's a tax cut over time. By any measure, it would make us more competitive in growing businesses and jobs," Sanford explained.
What kind of fuzzy math is that? Gov. Sanford is beginning to sound like a liberal Democrat trying to explain some lame-brained idea he came up with on the fly. A tax increase on cigarettes will mean higher taxes to people who smoke cigarettes. Period. There is no way around this, Gov. Sanford.
You may be wondering, if a non-smoker will not be directly affected by this cigarette tax increase, then why should he care whether there is an increase in the cigarette tax or not? Thatís a very good question. And there is a simple, yet profound answer to that question.
Although I do not smoke cigarettes, an increase in the cigarette tax would have an adverse affect on me personally because it would set a dangerous precedent for future tax increases on selective groups of people.
It may begin with the cigarette tax in 2003, which currently only affects about 25% of South Carolinians, but whatís next? A tax on Big Macs? How about taxing SUVís (as they are currently proposing in the California state legislature)? Nothing is too preposterous for members of the General Assembly to contemplate taxing. And what are the limitations for future tax increases once Pandoraís box has been opened?
What is most startling about Gov. Sanfordís cigarette tax increase proposal is that it came just a couple of days AFTER the state House of Representatives approved a $5.1 billion state budget that fully funded Medicaid. House Republicans restructured state tobacco bonds to provide secure funding for Medicaid. If it ainít broke, donít fix it is very applicable.
While the promise for a gradual reduction in the state income tax is enticing for some, it should not happen as a result of raising taxes elsewhere. Even Gov. Sanford admits that the very best estimates show that the state income tax rates will only drop slightly (maybe by a mere 0.5% in the first five years of his plan for those paying the highest rate of 7%, which, by the way, is not very many South Carolinians). Meanwhile, cigarette taxes immediately increase by more than 750%!!! How are cigarette smokers supposed to come up with the money to pay this unexpected and unfair tax?
This new state income tax reduction proposal by Gov. Sanford is not what he campaigned on. Of course, Sanford claims that there is not enough support in the General Assembly for his original income tax elimination plan. He believes this new plan, calling for a massive increase in the cigarette tax, is more palatable to state lawmakers. The coming debate between the House and Senate on the cigarette tax issue will be a fierce one, to say the least.
Republicans have always believed in lower taxes and less government. Neither of these exist in Gov. Sanfordís cigarette tax plan by any stretch of the imagination. And that is why I cannot and will not support it.
I urge Republicans all across South Carolina to contact members of the state legislature and Gov. Sanford to express your concerns about raising the cigarette tax. Tell them it is wrong to raise taxes when the economy is down and that you do not support any economic plan calling for tax increases. Let your voice be heard on this issue or risk being taxed someday soon for the very air that you breathe!