House OKs tax hike for smokes

COLUMBIA — Gov. Mark Sanford's veto pen is about the only thing standing between a 50-cent increase to the state's tax on a pack of cigarettes and as many as 200,000 low-income South Carolinians gaining health insurance.

In a historic move Wednesday, the House betrayed its Republican leadership when it went along with a Senate plan to raise the 7-cent tax and use about half of the money for Medicaid and half to help lower-income workers buy health insurance.

"We consistently talk about how government is too big, too wasteful, so what do we do? We turn around and create more programs," said House Majority Leader Jim Merrill, R-Daniel Island.

By only a handful of votes, and in some cases as few as two, the House shot down about 10 proposals to alter the Senate's plan.

Merrill proposed using the money to cut income taxes, while other amendments would have created tax credits for businesses that check the legal status of their workers, and put a large share into cancer screening and smoking prevention and cessation, among other ideas.

The tax has not been increased since 1977 and is the lowest in the nation, with neighboring Georgia at 37 cents a pack and North Carolina at 35 cents. The national average is $1.14.

The House made one change to the bill, directing $1 million to go toward the promotion of South Carolina agriculture products. If the Senate goes along with that change — as it is expected to — the bill will then head to the governor.

Sanford pledged to veto the bill if the House upheld the Senate's plan.

"We agree with the idea of raising the cigarette tax — if there is an offset — because we don't believe all taxes are created equally, and some are more harmful to the economy than others," Sanford said in a recent statement.

The House and Senate would need two-thirds approval to override the governor's veto, a hurdle neither body is sure it can clear.

If it becomes law, the 57-cent-per-pack tax would generate an estimated $159 million, although the money would decrease as people quit smoking. Meanwhile, the governor's office noted, Medicaid costs grow by 8 percent a year.

About half of the money would go toward credits worth an average of $2,000 for lower-income workers to purchase insurance. Workers would need to earn less than 200 percent of the federal poverty level, which is $19,600 for one person, $26,400 for two and $40,000 for a family of four, according to 2007 figures.

The value of the credit would vary depending on how many people apply.

And $5 million would be set aside to help smokers quit.

Reps. David Mack and Seth Whipper, both North Charleston Democrats, viewed the day as an enormous success.

"I'm so happy," Whipper said. "We will move South Carolina forward with this."

For some Republicans, such as Rep. Chip Limehouse of Charleston, the benefits of an increased cigarette tax outweighed the desire to see the revenue used for other purposes.

"I voted in the end to have a cigarette tax (increase) versus none," Limehouse said. "The best form of smoking cessation is a higher tax so young people can't afford to start."

Procedurally, no final roll call vote was required in the House to send the bill to the Senate.