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The down side is a sizable number of South Carolinians are going to receive a big tax increase -- and quite possibly without any of the money going to where health advocates most desire. Sanford and his allies insist the state should raise the lowest-in-the-nation cigarette tax by 30 cents a pack in order to fund an optional 50 percent reduction to the state's top marginal income rate -- from the current 7 percent to 3.4 percent. The governor says the tax cut is needed for S.C. business competitiveness. "First and foremost, this debate is about where we want to go as a state with respect to growing our economy," Sanford said during the Wednesday tour. "A lowered and flattened income tax would represent a significant step towards making our state more attractive, and improving our competitive position when it comes to growing our economy -- because as the Federal Reserve's recently said, marginal rates matter in terms of bringing jobs and investment to our state." With the governor on a desire to increase the 7-cent-a-pack cigarette tax are GOP and Democratic lawmakers, and many citizens. But they have other priorities for the money. Officials such as House Minority Leader Harry Ott have said the money should be targeted to health care. "Raising the cigarette tax for health care will create opportunities for businesses to provide coverage to their employees, cover more South Carolina children and invest in anti-smoking education programs to promote a healthier South Carolina," Ott said in January's response to the governor's State of the State address. For Sanford and other Republicans, there is the state priority of remaining "tax-neutral." If the cigarette tax is raised, some other tax must be cut proportionally. "Let's be equally clear that while we believe this proposal would go a long way toward increasing our state's competitiveness, it's also about not increasing the aggregate tax burden on South Carolinians," Sanford said. He restated opposition to proposals such as the Democrats' health options. "Some of the proposals to raise the cigarette tax for various health care programs would at best be another instance of government picking winners and losers in the private marketplace, and at worst a $245 million tax increase. Funding Medicaid by increasing the cigarette tax would only prolong the life of the Medicaid program temporarily -- meaning more tax increases down the road to sustain growth in the program. We continue to believe that any tax increase needs to be accompanied by a corresponding tax decrease." No matter the course, the outcome is about picking winners and losers -- and not just on the governor's part. The Democratic approach will mean a tax increase that won't help all South Carolinians -- but surely some smokers. The Sanford approach will mean a tax increase that will go to boost business on the high end of the economic scale -- just how many smokers would see a monetary benefit is unclear. Non-smokers may benefit from expanded health care options -- yet they may not. They surely would approve of an improving economy. The same for the 22 percent of the population choosing to smoke. But they are not nearly as likely to be neutral. Better health care? Better economy? Remember this is the state government that used the settlements with tobacco companies to fund economic projects rather than anti-tobacco programs as was the objective of health advocates (an action that admittedly was not without significant support in a tobacco state with infrastructure needs). A tax increase of more than 75 percent on cigarettes. That much would be certain. © Copyright 2006 by CigarettesOn.Com |
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