There’s a heated debate going on regarding two dueling proposals on the November 8th ballot, Constitutional Amendment 3 and Proposition A, both aimed at raising Missouri’s present lowest-in-the-nation cigarette tax. I’m personally voting “NO” on both, as explained below, but I also list pro and con reasons provided by others.
First, it’s worth comparing our state’s tax with that of surrounding states and also provide some historical perspective:
Missouri’s 17 cents per pack cigarette tax versus that in the 8 adjoining states. Average of 8 = $1.05. New York, at $4.35, is highest nationally.
The current Missouri state tax is 17 cents a pack, agreed to in a deal in 1993 between former House Speaker, Bob Griffin (who was later indicted and jailed on bribery and other charges), and the late John Britton, the formidable lobbyist for the now-defunct Tobacco Institute. The agreement was to raise the tobacco tax by 4 cents for school nurses in exchange for not raising it further. (ref: 2010/11/24 P-D OpEd:”Cigarette Taxes – Missouri can’t afford to be last” .)
Several attempts to raise it significantly, in part as a way to deter smoking and cut smoking rates in Missouri, have met resolute and successful opposition. A leading opponent is Ron Leone, Executive Director of the Missouri Petroleum Marketers and Convenience Store Association (MPCA) (www.mpca.org/) since tobacco sales are important to his members. (See, for example, this 2012 blog “Missouri keeps tobacco tax as the lowest in the nation.”)
Below are detailed descriptions of the two tobacco-related measures with commentary added:
Constitutional Amendment 3 (Raise Your Hands For Kids, aka RYH4K):
Cigarette tax primarily funding early childhood education (at least 75% mandated), childhood health programs (10%-15%), and smoking cessation and prevention programs (5%-10%). The additional 60 cent cigarette tax, reached after 4 years in 15 cents/year increments for a total of 77 cents, would put MO at 39th place in the current state list, ahead of neighboring NB, KY, and TN.
In addition, an equity assessment fee of 67 cents per pack is being assessed on any “Non-participating manufacturer” in the Master Settlement Agreement (MSA), inflation adjusted up each year. (This applies to the smaller tobacco companies (see below) which were not included in the MSA with states Attorney Generals, which requires substantial annual payments to the states).
I personally believe that any increase in cigarette taxes, which should be done as a single tax hike for maximum impact and not phased in, should be targeted towards the following goals:
1. Deterring would-be smokers from ever starting by aggressive anti-tobacco advertising
2. Large enough to persuade at least some smokers to quit, and perhaps
3. Offer subsidized or free quit smoking programs.
This will ensure that over time, provided the newly-funded programs are designed to be successful, the number of Missouri smokers and tax revenue raised from cigarettes will both fall in unison.
The largest financial supporter of this amendment is R.J. Reynolds
, which I surmise had a hand in writing it, such as phasing in the tax increase over four years, and especially for adding the “equity assessment fee” of 67 cents per pack on smaller tobacco companies, on top of the 60 cent increase, in hopes of putting them out of business. Normally, tobacco companies fight
tooth and nail against proposals to raise tobacco taxes, but R.J. Reynolds has to date reportedly spent over $12 million supporting
I’m not enthusiastic about using such taxes to fund unrelated programs, however worthwhile, because then you have a new source of funding (smokers) which this new program ideally will want to maintain.
In addition, Amendment 3 prohibits any money from being spent on issues relating to abortion, stem cells, and tobacco related research, as defined below:
Section 54(b). 2. …. None of the funds collected, distributed, or allocated from the Early Childhood Health and Education Trust Fund shall be expended, paid or granted to or on behalf of existing or proposed activities, programs, or initiatives that involve abortion services including performing, inducing, or assisting with abortions, as defined in law, or encouraging patients to have abortions, referring patients for abortions not necessary to save the life of the mother, or development of drugs, chemicals, or devices intended to be used to induce an abortion. None of the funds collected … shall be expended, paid or granted to or on behalf of any abortion clinic, abortion clinic operator, or outpatient healthcare facility that provides abortion services, unless such services are limited to medical emergencies. No funds …. shall be used for human cloning or research, clinical trials, or therapies or cures using human embryonic stem cells, as defined in Article III, section 38(d). No funds … shall be used for tobacco related research of any kind.
Many groups oppose the Raise Your Hand for Kids amendment, including Tobacco Free Missouri. Dena Ladd, Executive Director of Missouri Cures, listed them in an October 23rd, 2016, St. Louis Post-Dispatch OpEd: Why medical research advocates are so concerned about Amendment 3.
It should also be noted that the St. Louis Post-Dispatch editorial board
is recommending a YES vote on both Amendment 3
and Proposition A
, after flip-flopping twice on Amendment 3 earlier in the year (see Riverfront Times Sept. 27th story
critical of the Post-Dispatch).
A person I respect and former Missouri House member, who now heads a local group with divided views among its members, wrote to me as follows:
“Members who have fought year after year for investment in early childhood education are supporting it – they are tired of waiting for our General Assembly to address our outdated, unfair, and inadequate revenue system. While the General Assembly continues to tax cut year after year – a billion dollars in cuts over the past 15 years approximately – essential programs languish, and only three percent of our children are in high quality early childhood education. We are structuring ourselves to fail in so many ways!
Members who oppose Amendment 3 generally think it’s a ploy by Big Tobacco to make more money and that the early childhood advocates are being played. Several have a hotbutton issue that turns them against 3 – the definition of abortion in the ballot measure language, fears of some slippery slope on stem cell research (an argument that I do not find persuasive), wishes for a larger tobacco tax from a “what works in comprehensive tobacco control” perspective, etc.).”
The Missouri Petroleum Marketers and Convenience Store Association (MPCA), a trade group representing many independent gas stations and convenience stores, is leading the opposition to Amendment 3 and is backing a competing – and substantially smaller – cigarette tax, phased in over four years, that will appear on the November ballot as Proposition A. Not surprisingly, it leaves in place the current exemption for any “Non-participating manufacturer” in the Master Settlement Agreement which are specifically targeted in the competing RYH4K ballot initiative.
The two major financial supporters of this proposal are reportedly North Carolina-based Cheyenne International and XCaliber International of Oklahoma. Cheyenne (Brands: Aura, Cheyenne, Decade) has sent $2.8 million to the fight, while XCaliber (Brands: Echo, Exeter, Edgefield) has contributed $2.9 million.
Under Proposition A, the additional tax on a 20 pack of cigarettes will increase over a period of four years as follows:
13-cents-per-pack on January 1st, 2017, i.e. 30 cents total state tax
An additional 5-cents-per-pack on January 1st, 2019, to 18-cents-per-pack for 35 cents total
An additional 5-cents-per-pack on January 1st, 2021, to 23-cents-per-pack for 40 cents total
These increases will not apply to inventory as of December 30th in any previous year.
In addition to leaving in place the current pricing windfall of the brands mentioned above, what renders Proposition A totally unacceptable is the following language it contains:
6. The additional taxes levied in subsections 1 and 2 of this section shall immediately, automatically and permanently be repealed and reduced to zero under any of the following events:
(1.) In the event any tax or fee increase on some or all cigarettes or other tobacco products is officially certified to be placed on any local or statewide ballot by the Secretary of State or any other election official at any time; or
(2.) In the event any provision of subsections of 1 through 9 of this section is ruled null and void, invalid, unlawful, severable or unconstitutional for any reason by any state or federal court of law.
What this means is that if a political subdivision at any level even works to put an increase on the ballot, the state cigarette tax levied through this amendment is repealed. This has been described as a poison pill. There will never be an increase over this amount without this proposed increase being nullified.
Unsurprisingly, Proposition A leaves in place the current exemption for a “Non-participating manufacturer” in the Master Settlement Agreement
which is targeted in the competing RYH4K