50 cent cigarette tax increase headed to House

COLUMBIA, S.C. - The nation's lowest cigarette tax would jump by 50 cents and support a new health insurance program for low-paid South Carolina workers under a plan that's expected to reach the state House this week.

The bill, introduced by House Speaker Bobby Harrell, R-Charleston, would raise the current 7 cent-per-pack tax to 57 cents. That generates $147 million, with $139 million for the insurance program. It also sets aside $5 million for anti-smoking efforts and nearly $3 million for marketing South Carolina agriculture products.

Under the new insurance program, workers who earn up to 200 percent of the federal poverty level would get a 75 percent credit on health insurance through the Palmetto Health Care Safety Net Program. The state support would be capped at $3,000 a year. The credit would become available in July. The current federal poverty level for individuals is $10,830.

For small employers, the program would pay for 67 percent of a policy, up to $3,000 a year. The amount of state support would be adjusted yearly, but couldn't fall below 50 percent of the premium.

Officials expect the cigarette tax revenue will fall over time, but House Ways and Means Committee Chairman Dan Cooper, R-Piedmont, said that's not a problem for the state.

"When the money runs out, that's it," Cooper said. "Whatever the tax generates is how much would go into that pool."

Cooper chairs the subcommittee that takes up the bill Tuesday. He expects little opposition to the insurance proposal as a way to bring federal Medicaid matching cash into a private health insurance system. A nearly identical plan is used in Oklahoma,

While the concept of using a higher cigarette tax to make insurance available has broad support, Cooper said lawmakers disagree about how big the tax increase should be. Some, including Cooper, argue for a 30 cent increase as a way of keeping cigarette costs competitive in counties that border North Carolina and Georgia. Others want it raised to $1 a pack.

"I think the only argument is going to be over how much we put on a pack," Cooper said.

House Minority Leader Harry Ott, D-St. Matthews, said he supports Harrell's bill, noting that it mirrors a proposal he pushed a couple of years ago.

Last year, the Legislature paired a similar insurance program with a Medicaid expansion. But Gov. Mark Sanford vetoed the bill. Harrell helped sustain the veto, but promised this year to back a tax increase tied to health insurance. Ott and Cooper said that should ensure the bill clears the House and has enough support this time for a veto override.

Sanford spokesman Joel Sawyer said the governor has not reviewed this year's proposal.

Ott had insisted earlier that the legislation expand the state's Medicaid programs for children in low-income households. He still wants the state to expand them, but not necessarily in the cigarette tax bill.

There not a lot of appetite for that, said Robbie Kerr, director of Covering Carolina Cooperative, a group that includes health insurers backing Harrell's bill. "We recognized if we were going to get something out, we're not going to be successful in increasing basic Medicaid."

The nearly $3 million to market South Carolina's agricultural products doesn't hurt either, said Ott, who was planting corn in his fields Monday.

"Agriculture is the number one industry in the state of South Carolina," Ott said. "We believe we need to put some back in marketing."