COLUMBIA — South Carolina smokers could be shelling out more in taxes for a pack of cigarettes for the first time in more than 30 years.
The Senate Finance Committee pushed forward a plan late Tuesday that would increase the tax on a pack of cigarettes from 7 cents, the lowest in the nation, to 57 cents. The money generated would bring an additional 177,000 people, including more than 70,000 children, into the Medicaid insurance program.
Opponents say the proposal has a slim chance of becoming law, although there seems to be significant support for increasing the tax and applying the revenue to health care. The committee's 14-8 vote for approval surprised even Senate Minority Leader John Land, who proposed the idea.
"It's an opportunity that comes along once in a political lifetime," said Land, D-Manning, who has served in the Legislature since 1975.
At 57 cents per pack, the tax would generate an estimated $159 million. Of that, $5 million would go toward a smoking cessation and prevention program and the rest would be used to leverage federal funds for Medicaid, which provides health care to low-income people. The federal government gives $3 for Medicaid for every $1 of state money.
In all, that would pour $511 million more each year into the Medicaid program.
Emma Forkner, director of the state's Department of Health and Human Services, the agency that administers Medicaid, said she was pleased to see the senators' commitment to use an increase in the cigarette tax for health care.
As for the money it could mean for Medicaid, Forkner said, "It's too early yet to get excited."
Senate President Pro Tem Glenn McConnell, R-Charleston, said increasing the tax without a corresponding tax decrease would face a high hurdle in the Senate. He favors an earlier proposal that would use the revenue generated by a 50-cent per pack increase to provide tax credits for individuals and small businesses to purchase health care insurance.
Sen. Larry Grooms, R-Bonneau, pushed for the committee to adopt that plan. Many of his fellow committee members were not sold on the idea, mainly because research showed the credit would only be worth about $475.
Land said health care coverage, even in its basic form, is much more expensive than that. One estimate put the cost at $4,200 a year for an adult and $1,500 a year for child, although the price tag varies depending on the policy and the level of coverage.
"That's not going to buy any kind of meaningful policy," Land said. "I think we're just fooling ourselves to think this approach has any viable means to it at all."
Grooms argued that researchers had estimated that 90 percent of 346,000 eligible workers would take the credit; and for every person who didn't, the credit would grow.
If the state helped about 311,000 more people get health insurance, "we've done something good," Grooms said. He said he could not vote for the Medicaid proposal because of the burden it could put on the state's general fund if the demand for insurance exceeds the revenue generated by the cigarette tax.
"This would create an unfunded liability to the state," Grooms said. "I'm going to vote against anything that won't empower people."
A variation of the plan to use cigarette tax revenue toward health insurance tax credits was endorsed by a group of health care, business and insurance industry leaders who have come together to form the "Covering Carolina Collaborative."
A plan to increase the cigarette tax passed the House last year, but the proposal has changed significantly and it would likely face additional challenges there before it could ever make it to the governor's desk.