Legislature debates new cigarette tax

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March 7th, 2011

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Lincoln, NE – Raising cigarette taxes would improve people’s health and ease the state’s budget problems, advocates told a legislative hearing Friday.

The proposal by Grand Island Sen. Mike Gloor would add $1.35 to Nebraska’s current tax of 64 cents a pack for a total of $1.99. Supporters project that would raise more than $100 million a year, and more importantly they say, deter 11,000 adults and 20,000 children from smoking. The bill would use about one quarter of the extra revenue to cancel proposed cuts in Medicaid payments to doctors, hospitals, and others. Almost all the rest could be used for whatever the Legislature wants. Kim Russel, president of Bryan LGH hospital in Lincoln, supported the bill on behalf of the Nebraska Hospital Association.

Sen. Mike Gloor's proposal would increase taxes on cigarette purchases throughout Nebraska (Photo courtesy Nebraska Legislature)

“It will save the state money in the short and the long run on the cost of health care,” he said. “And it will preserve urgently needed Medicaid funding to serve Medicaid patients in every hospital in the state. I really believe your vote is a two-fer because it’s a vote both for physical health and for fiscal health.”

Senator Deb Fischer of Valentine asked Lou Kleager, president of the Nebraska Medical Association, about his support of the bill.

“If it’s truly a health concern, why don’t we ban the sale of cigarettes?” she asked.

Kleager responded, “I think it would be a long term goal. And I think you’d have to arrive there incrementally over a period of time. And in the meantime, get some increased revenue as you work toward that.”

Senator Abbie Cornett, chairwoman of the Revenue Committee that heard the bill, commented that you’d have to use all of the revenue for law enforcement to enforce a ban. Opposing the bill for the Nebraska Petroleum Marketers and Convenience Stores, Mark Whitehead, predicted it would fail.

“The reality is, people will find their cigarettes whichever way they possibly can, and that is a reality at the detriment of the retail industry in the state of Nebraska. They will bootleg it in, they will do it under the counter, they will do it via email.”

At the end of the hearing, Gloor said lawmakers might scale back the $1.99 proposal to match Iowa’s tax of $1.36. Any proposed increase would probably have to get extra votes to overcome a likely veto by Governor Dave Heineman.

WEB EXTRA

A related story from our Student Lab, Jon Schriner investigates for The Omaha News how smokers feel about the proposed tax.

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