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Cigarette prices may rise

June 20, 2002
Buffalo Wild Wings

Gov. John Engler on Wednesday joined the bandwagon of state lawmakers looking to raise the state’s cigarette tax.

Flanked by legislative leaders and representatives from the Michigan Education Association and Michigan Association of School Administrators, the governor proposed a 50-cent tax increase on cigarettes. Twenty cents of the increase would go toward the school budget for the fiscal year that begins Oct. 1, 2003.

“It’s kind of the key that unlocks the budget,” Engler said during an afternoon news conference.

Most of the rest of the increase, 22 cents, would go toward the state’s general fund, allowing the Legislature to make $150 million in cuts needed to balance the budget. Four cents would be allotted to the Medicaid Benefits Trust and 1 cent would be set aside for a Wayne County health care program for low-income residents.

The increase would bring the cigarette tax to $1.50 per pack.

“This is a sensible solution that addresses current needs, restores many important programs and preserves our commitment to K-12 education,” said House Speaker Rick Johnson, R-LeRoy.

The Senate recently rejected an attempt to raise the tax by 25 cents, but Senate Majority Leader Dan DeGrow said he thinks this increase will pass because it’s tied to education.

It’s unclear if the House will have enough votes to pass the measure. At 11:30 p.m., the body was debating the 145-page proposal from the governor.

The tax increase is estimated to bring in about $290 million annually.

“We’re holding out hope that this passes and prevents a number of targeted cuts,” said Kelly Chesney, spokeswoman for the Department of Management and Budget. “We’ve already implemented belt-tightening measures across the board. We don’t have the ability to tighten our belts any further.”

Rep. Paul DeWeese, R-Williamston, said he hopes the increase will be seen as tobacco-cessation effort, rather than a tax increase.

“A cigarette tax increase could result in fewer young people starting to smoke and people who have already been smoking for a number of years to quit,” said DeWeese, a physician.

And some statistics support DeWeese’s hopes. A year after Michigan raised its cigarette tax from 25 cents a pack to 75 cents in 1994, cigarette sales fell 30 percent, according to the Pacific Research Institute.

This increase could lead to 40.2 million fewer packs of cigarettes smoked each year in the state, said Charlie Baase, spokesman for the Tobacco-Free Michigan Action Coalition.

“Any cigarette tax increase means lives saved in Michigan,” he said. “Our mission is to reduce tobacco use, so anything and everything we can do helps.”

But some legislators aren’t buying in.

Rep. Leon Drolet, R-Clinton Township, said he signed a pledge to his constituents when he was elected not to increase taxes, and he’s sticking to it.

“They expect me to uphold that pledge,” he said. “Supporters of the increase are calling it a user fee. To me, that’s as silly as calling income tax a user fee on your income.”

Instead, Drolet supports the tie-barred bills that recently passed in the Senate that would virtually drain the state’s “rainy day” fund while retaining the single-business tax cut.

That fund had $1.2 billion in fall 2000.

“The rainy day fund was established for such an occasion,” Drolet said of the current recession. “Also, this would be the worst time to raise business taxes.

“We want businesses to hire people, not go into debt.”

Rep. Virg Bernero, D-Lansing, contends it would be unfair to retain tax cuts while taxing “the people that can least afford it and who are addicted.”

“The fact that we are considering raising taxes on the middle- and lower-income people while we’re lowering taxes for businesses mystifies me,” he said. “I can’t believe anybody has the guts to even suggest that.”

And Jessica Hohn, a no-preference sophomore who has been smoking for about a year, said the tax hike will only anger smokers.

“If people are already addicted, they’re probably not going to quit because of 50 cents,” she said.

“They’ll probably just get pissed off and keep smoking.”

The Associated Press contributed to this report.

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