Cigarette Tax Hike Heads to House Floor

The tax writing committee in the South Carolina House of Representatives has approved a 30-cents-per-pack cigarette tax hike. The bill now heads to the floor of the House.

Advocates of the cigarette tax hike have made a splash this week about the bill's impact, but have focused almost entirely on its impact as a deterrent for smokers. Less emphasized, but equally consequential, is the impact of this proposal on tax fairness: a cigarette tax is one of the most regressive taxing options available to state governments. It would be hard to design a tax that hit the poorest families harder-- and let the wealthiest off easier.

This doesn't mean that the folks at the Campaign for Tobacco Free Kids are wrong when they espouse a cigarette tax hike. It just means they've got their eye on a different set of policy goals: reducing smoking among South Carolinians and cutting health care costs associated with smoking.

There are two problems here. One is that the scale of the cigarette tax hike under discussion here-- from a tiny 7 cents per pack to a slightly-less-tiny-37 cents per pack-- isn't gonna deter many South Carolinians from smoking. It would likely take a much higher tax rate to achieve that. With the national-average state cigarette tax rate hovering around $1.00 per pack, the Palmetto State has a long way to go before its cig tax even begins to compare to what other states do.

The second problem, with all due respect for the South Carolina lawmakers sponsoring this package, is that lawmakers are very likely not thinking about this tax hike the same way the Tobacco-Free Kids folks are. Lawmakers see dollar signs. They want to make their proposed cuts in income and food taxes seem more affordable, so they're looking under the cushions for any extra pennies they can find.

If the current trajectory of the legislative session continues, and South Carolina swaps a higher cig tax for a lower income tax, the result won't be a healthier South Carolina: instead, the state will have a tax system that is sharply more unfair.