House OKs tax increase on cigarettes

COLUMBIA --- Democrats in the South Carolina House declared a major victory Wednesday as they upheld a Senate plan to increase the state's cigarette tax by 50 cents and use most of the money to provide health care for low-income residents.

The Senate approved the increase earlier this month, estimated to bring in $159 million in additional taxes. The only change made in the House was setting aside $1 million to promote food grown in South Carolina.

"It's a great day!" House Minority Leader Harry Ott exclaimed after the House returned the bill to the Senate nearly intact. "We are very happy!"

Senate Finance Chairman Hugh Leatherman said the Senate would agree to the House change, which sets it up to go to the governor.

But the measure faces a steep hurdle. Gov. Mark Sanford has pledged to veto any tax increase that doesn't cut taxes equally elsewhere. Overriding the veto would take a two-thirds majority.

"We also think it's poor policy to use the money to expand Medicaid, because the cigarette tax money will at best remain steady, and will likely decrease -- while Medicaid expenditures can be expected to increase by 8 percent a year. That's in effect a guaranteed future tax increase," said Sanford spokesman Joel Sawyer.

The state's per-pack tax was last increased 31 years ago. It is now the nation's lowest at 7 cents a pack. New Jersey's is the highest at $2.58 per pack.

The measure would provide health care to an estimated 80,000 parents of children already covered by Medicaid, and help at least 30,000 more workers afford insurance through three years of premium assistance, said Mr. Ott.