The Palmetto Insider

The blog of the South Carolina Policy Council

Cigarette Tax Increase: Unhealthy for South Carolina

with one comment

For the third time in as many years, the General Assembly is attempting to push through a cigarette tax increase. As related by a new fact sheet from the Policy Council, here are five things you need to know about this tax increase:

This is a Tax Increase

Lawmakers don’t really want to highlight that fact, but that’s what it is. Similar proposals has been referred to as “health care user fees.” Also, under the current proviso, should the funds going to the Medicaid Reserve Fund reach a certain level, remaining revenue will go to the General Reserve Fund, and then General Fund expenditures.

The Cigarette Tax is a Job Killer

Last session, the Policy Council demonstrated that raising the cigarette tax by 50 cents would cost 4,100 jobs. Increasing the cigarette tax will also reduce income for mom-and-pop retailers and others.

The Cigarette Tax is Unfair

A tax increase is not a good strategy for making smokers subsidize their own public health care costs. A better solution is to provide incentives for smokers to quit Another option is to require smokers who are on Medicaid to contribute to the additional cost of their coverage, as opposed to passing a tax increase that brings about job and investment losses.

Spending is Already Too High

This is more of the same for South Carolina. Rather than making government smaller and leaner—and in spite of budget cuts caused by the recession—tax and spend remains the most creative policy lawmakers can come up with. Spending remains high for core services, such as education, and also for dubious spending like economic development.

The Cigarette Tax is an Unreliable Revenue Source

Given that increasing the cigarette tax is going to destroy jobs and private investment, increased revenue from the tax will likely be exaggerated. In particular, increasing South Carolina’s cigarette tax will lead to reduced sales, especially for retailers in border counties.

Read the full Policy Council report on the proposed cigarette tax increase.


Written by SC Policy Council

March 1, 2010 at 3:39 pm

Posted in Healthcare, Public finance, Taxes

Tagged with ,

One Response

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  1. I think it would be ill advised not to raise the tax on cigarettes.A tax levied of .03 cent in 1923 and its only .04 cents higher 87 years later. Are lawmakers that dependant on the tobacco lobbyist money? I hope all of SC will take offense that medicine is being taken away from needy children so that people can smoke; when studies of second hand and even third hand smoke show that it is unhealthy. Seriously, how will they be able to sleep at night? The pulse of SC beats strong on this issue and repercussions in the next elections to come surely will be affected by this lack of mercy for the children of SC.


    March 3, 2010 at 11:14 pm

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