BISMARCK, N.D. (AP) - Supporters of a proposal to increase North Dakota’s tobacco tax for the first time in nearly a quarter century believe it could reduce smoking while also boosting health care for military veterans. But they might be smoked out by tobacco industry money and uncertainty about how the additional tax collections would be spent.
Voters on Tuesday will decide the fate of Measure 4, which would raise the state’s cigarette tax from 44 cents a pack to $2.20 - a 400 percent increase to the third-lowest tax in the nation. The tax on other tobacco products would rise from 28 percent of the wholesale purchase price to 56 percent.
The jump in the cigarette tax would be the largest among states since Minnesota raised its tax by $1.60 in 2013, according to the Campaign for Tobacco-Free Kids, though a measure on California’s current ballot calls for a $2-per-pack increase.
Minnesota’s adult smoking rate last year was 14.4 percent, down from 16.1 percent the last time it was measured in 2010, and anti-smoking officials believe North Dakota could see a similar drop.
“In places where there is a significant (tax) increase, we do see consumption go down across the board, especially among kids,” said John Schachter, spokesman for the Campaign for Tobacco Free Kids.
Eric Johnson, a Grand Forks doctor who spearheaded the petition drive to get the measure on the ballot, said anti-smoking advocates are tired of trying to get help through the Legislature, where a lot of lawmakers have promised constituents they’ll oppose any tax increases.
Military veterans groups that have joined with groups such as the American Lung Association to push the measure also have grown weary of trying to convince legislators of the need to dedicate more money to health programs for vets, said David Johnson, adjutant of the American Legion in North Dakota. Groups have put together a list of 45 needs that range from behavioral health treatment programs to work at the state Veterans Cemetery.
“There’s plenty of things that have been asked for that have been left unfunded,” he said.
Money generated by a tax increase would go into an existing trust fund for public health programs and into a newly created trust fund for veterans. The state Tax Department estimates the tax bump would generate $142 million in the next two-year budget cycle. The governor would appoint boards to oversee spending - a major problem for some measure opponents.
“It’s nine pages of very complicated and complex rules and changes to North Dakota law, and in that entire measure we believe there’s only about four sentences that vaguely spell out how that money is going to be spent,” said Mike Rud, president of the North Dakota Retail Association.
Eric Johnson said money wouldn’t be spent without strategic plans in place.
Measure opponents also object to what they say would be a huge tax increase on one segment of the population - smokers.
“If we’re going to raise money for veterans, we should all pay for that,” Rud said.
Deanne Schatz, who operates a truck stop in Fargo, worries that a tax increase will dramatically cut into her business. Tobacco products make up as much as 40 percent of her inside store sales.
“It’s going to impact business, just as it has to neighboring retailers (in) Minnesota,” she said. “They just virtually aren’t selling cigarettes at all.”
Schatz said she’s thankful that the tobacco industry is fighting the North Dakota measure, and sees nothing wrong with it.
“If it was (a tax increase) with chocolate, or gas - targeted - those industries would step in, too,” she said.
State campaign finance documents show that RJ Reynolds Tobacco Co. has contributed about $1 million to the opposition effort, and Marlboro-maker Altria Group Inc. has provided more than $2.7 million. Spending by major health groups to promote the measure is tiny in comparison - about $14,000 from the American Lung Association and just $147 from the American Heart Association.
“It’s hard to fight that,” David Johnson acknowledged. “We don’t have that kind of cash.”
Altria spokesman David Sutton and RJ Reynolds spokesman David Howard said the proposed tax hike in North Dakota would be targeted, unfair and excessive.
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