State Rep. Harold Ritchie is proposing a more than fourfold increase in Louisiana’s cigarette tax to help generate dollars to close a $1.6 billion state budget hole.
The tax is 36 cents per pack — the third-lowest in the nation. Ritchie has prefiled two bills: One would change the constitution and the other would change a state statute, but both would raise the tax to $1.54 per pack.
“I think most folks realize cigarettes are bad for you,” said Ritchie, a smoker and a funeral home owner. “It’s a more acceptable tax than anything out there.”
If approved, the tax increase would raise $240 million annually, according to the Legislative Fiscal Office.
Constitutional amendments require a two-thirds vote of approval by the Legislature, and then submission to the voters for approval.
A constitutional amendment would circumvent a veto by Gov. Bobby Jindal, who opposes tax increases. The statutory change requires a two-thirds vote for passage but would be subject to Jindal’s veto pen.
Ritchie said he decided to prefile both bills before Jindal announced he was “willing to entertain” a cigarette tax increase if spending is cut elsewhere in the budget, making it what is called “revenue-neutral.”
But, Ritchie said, “I don’t have any offsets.”
On Tuesday, Jindal’s communications director Mike Reed restated the governor’s position: “We could only support a cigarette tax increase if it is offset with a tax cut elsewhere.”
The Bogalusa Democrat, who has pushed for cigarette tax hikes in the past, said there is broad public support for a cigarette tax increase.
He said he’s not sure whether he’ll get the amount he is seeking.
Ritchie noted that city governments are beginning to impose smoking bans, the most notable recently in New Orleans.
A team of economists recently told legislators that a cigarette tax increase is one of several sources from which they could immediately generate dollars to plug a $1.6 billion budget shortfall in revenues for the year beginning July 1.
The economists recommended matching the $1.41 rate charged in Texas or at least the 68 cents Mississippi collects. The average tax nationally is about $1.08 per pack.
Ritchie got some support Tuesday from the Louisiana Budget Project for a big increase in the cigarette tax — in fact, a few pennies more than the one he’s pushing.
“If there ever was a time to raise the cigarette tax, it is now, when Louisiana desperately needs new revenue and smokers need extra encouragement to quit,” Budget Project director Jan Moller said in a news release accompanying the group’s latest report.
The Budget Project said increasing the tax by $1.25 a pack would generate $230 million that could be used “to stave off state budget cuts.”
“More importantly, it would help encourage 46,000 adults to quit smoking and keep 36,700 teenagers from taking up the habit. That would lead to $1.57 billion in long-term health care savings, including more than $500 million for Medicaid.”
The Budget Project monitors and reports on public policy and how it affects Louisiana’s low- to moderate-income families.
Moller said some “policymakers” may be tempted to pass a much smaller tax “to simply raise revenue.” But to take that approach would be a “lost opportunity to improve public health,” he said.
“If policymakers want to create long-term health care savings and save lives in addition to helping the state budget, they should support a $1.25 a pack increase.”
Cigarette smoking in Louisiana costs taxpayers almost $700 million per year, the Budget Project reported, the equivalent of $403 for every household.
The Budget Project report also said that smoking adds $523 million per year in Medicaid costs, $88 million in LSU public-private partnership hospital costs and $85 million in costs for state employee and retiree health benefits.
The group noted that private sector businesses also incur higher health insurance costs and lost productivity because of smoking.
Follow Marsha Shuler on Twitter, @MarshaShulerCNB. For more coverage of the State Capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog/.