Former state Rep. John Graham Altman makes a boast that was popular among S.C. Republican legislators until the passage of a cigarette tax increase May 13: He never voted to raise taxes.
"I have a predilection against taxes," said Altman, lighting a cigarette in his North Charleston law office Thursday. He said the fact that so many Republicans voted to override Gov. Mark Sanford's veto of the legislation represents "a changed spirit in the General Assembly."
Whether the increase signals an ideological shift, it is a dramatic change in policy: Don Weaver, president of the fiscally conservative South Carolina Association of Taxpayers, said he believes that when the 50-cent-per-pack cigarette tax increase goes into effect July 1, it will be -- with some caveats -- the state's first tax increase in more than 25 years.
South Carolina's cigarette tax was previously 7 cents per pack, the lowest in the country.
"There was a sea change in the attitude," said Weaver, an unpaid State House lobbyist. "There were legislators we could count on in the past, but this year when I was out in the lobby, they'd see me coming and they'd try to stay away."
The debate over the increase, which spanned a decade, involved some semantic wrangling over the word "tax." Sanford, 13 senators and 33 representatives had signed the Taxpayers Protection Pledge, put out by the Association of Taxpayers and Americans for Tax Reform, stating, "I will oppose and vote against any and all efforts to increase taxes." Of those, four senators and 15 House members broke the pledge by voting to override Sanford's veto.
According to Americans for Tax Reform, all four Republican contenders for governor have signed the Taxpayers Protection Pledge.
But what, exactly, is a tax? Weaver said the Association of Taxpayers does not count the 1 percent sales tax increase in 2007 because it came with a property tax decrease and was intended to maintain total tax revenue. When it comes to the cigarette tax, though, a string of euphemisms have sprung up: sin tax, user fee and cost shift, to name a few.
"It is a tax, but we'll call it a user tax," said Rep. Chip Limehouse, R-Charleston, an early proponent of the bill. Limehouse, whose voting record otherwise reflects a tendency to lower
taxes, said the T-word is "a bad word in South Carolina."
The cigarette tax increase comes as the state makes drastic cuts in health and social services, operating on a $5 billion budget -- roughly the same as 10 years ago -- following tax cuts during prosperous years and a severe revenue dropoff during the recession.
While tax increases have been rare in South Carolina, fee increases have been numerous. South Carolina Policy Council President Ashley Landess characterizes the Legislature's fee increases as "sneaky."
"They are really good at telling you, 'We haven't raised taxes,' " Landess said. "You can call it a fee, but what happens? It costs people money."
In addition to the cigarette tax increase, the Legislature had approved fee increases for car registration, hunting and fishing licenses, boat titles and court fees. After coming up short on votes to override Sanford's veto of the fees, legislators worked on a budget that includes multimillion-dollar cuts in AIDS prevention, colorectal and breast cancer screening, and smoking cessation.
Rep. Kenneth Bingham, R-Lexington, is one of the legislators that Americans for Tax Reform has said broke the no-tax pledge. Bingham said he signed the pledge during his House campaign in 1999 but did not re-sign for later terms, unaware that he would be held to it for life. Bingham also said many taxpayer-advocacy groups get funding from tobacco companies. In fact, Americans for Tax Reform has received money from the Tobacco Institute, a trade and lobbying group for the industry.
For Limehouse, who said his grandmother died of lung cancer from smoking, the bill is a worthwhile inroad against a dangerous habit. The South Carolina Tobacco Collaborative has predicted the tax increase will keep 23,000 children from smoking.
"Some libertarians might take fault with that, saying, 'Let us decide what's good and not good for our health,' " Limehouse said. "But if we tax it and it causes people to stop using it, then that's a bad thing how?"
The cigarette tax increase is projected to bring in $136 million over the next year, with the vast majority of revenue -- $125 million -- going to pay Medicaid costs, with the potential to bring in a 3-to-1 match from the federal government. Five million dollars would go to Medical University of South Carolina's Hollings Cancer Center, and $5 million would go toward smoking cessation and prevention.
For Altman, the cigarette tax increase is about controlling behavior. He said he has smoked since age 14 and does not intend to change his buying habits once the tax takes effect.
"I'm not going to let this handful of misguided liberals who've infiltrated our Republican Party control my lifestyle," Altman said.