Georgia House proposal for cigarette tax hike to promote public health runs into anti-tax buzzsaw
A pair of proposals would increase the tax on cigarettes by 20 cents, bringing it up to 57 cents per pack, and bump the tax on vaping products to 15%, up from 7%. Justin Sullivan/Getty Images
Georgia smokers and vapers could be paying more for their nicotine habit under a pair of bills working their way through the state House.
This week, the House Subcommittee on Tax Revisions held its first hearing on House Bills 191 and 192, which would raise taxes on cigarettes and vape products respectively. The cigarette tax is expected to bring in $90 million, which would be dedicated to health care programs for Georgians. The subcommittee didn’t vote to move the bill along to full committee consideration.
Under HB 191, the price of a pack of smokes would increase a penny per cigarette to 20 cents, bringing Georgia’s total state tax to 57 cents. The tax on vape products would increase from 7% to 15% under HB 192. Cigars and smokeless tobacco products like chewing tobacco would be exempt.
Georgia has the second lowest costs on cigarettes in the country behind only Missouri.
The goal is to reduce health risks caused by smoking, and at the same time, create a dependable source of revenue for the state, said Rep. Ron Stephens, a Republican from Savannah and the sponsor of both bills.
“If you smoke hard enough and long enough, you’re going to get sick. It shouldn’t be up to the taxpayers in the state of Georgia to fund your health care cost for your decision. It’s your choice, but it should not be my bill to pay,” said Stephens, a pharmacist.
Stephens said the state subsidizes healthcare costs at about $699 million in Medicaid expenses alone as a result of tobacco-related illnesses, and the annual health care expenditures in Georgia caused directly by tobacco use is about $669 billion.
Proponents of the bill said it could bridge the medicaid gap, alleviating the financial burden felt by smoking and non-smoking Georgians alike.
“Right now, the cost per family that we all pay through our taxes to cover the health care related costs of people who smoke in the state is about $900 per household,” said Johns Creek Democratic Rep. Michelle Au, a physician and cosponsor of the bill. “So we all are already paying that tax. I want people to understand that even though they don’t see it, they don’t feel it, they’re not opening up their wallets and paying $900 like you do when you buy a pack of cigarettes, this is a cost we’re already bearing in sort of an invisible tax.”
The bill has the backing of major health care groups including the American Cancer Society, American Heart Association and American Lung Association.
Lee Hughes of the American Cancer Society referenced a 2020 Landmark Communications poll which found that nearly 75% of adult Georgians approved of a one dollar per pack increase.
It’s been 20 years since the last time Georgia raised its tobacco tax, he said.
“The history of this tax is very interesting. 21 years ago, Georgia elected its first Republican governor since Reconstruction, Sonny Perdue,” Hughes said, “This was something he pushed in his very first year in office. It went from 12 cents to 37 cents a pack.”
Hughes reminded the representatives on the committee that Perdue, now chancellor of the University System of Georgia, has enjoyed a long and successful political career after raising the tobacco tax.
The 20 cent tax increase would still leave the state well under the national average $1.91, but the raise would bring the state in line with the rest of the South, where tobacco crops were once more plentiful. Some experts say that 20 cents is too low.
Decades of research in the U.S. around the world show large tax increases lead to reduced cigarette use, fewer deaths related to smoking, less spending on health care and other benefits, said Dr. Jidong Huang, Professor in the Department of Health Policy and Behavioral Sciences in the Georgia State University School of Public Health.
“However, the public health and economic benefits of smaller tax increases, which is the case for the cigarette tax, 20 cents, proposed in the bill, can be easily offset by the tobacco industry’s price-reducing strategies, such as price promotions,” he said.
Au said the original intent was to bring the tax to the national average of $1.91, “which is actually quite fitting because the bill number is HB 191,” she added. “We didn’t choose that. It just happened because the universe tells us things sometimes through our bill numbers.”
“Now, because Georgia has not raised the state tobacco tax in 20 years and because sometimes, when we have certain conversations, especially as it relates to tax strategy, some folks are a little bit more resistant to having tax increases of various sizes, we ended up in having a lot of conversation with our Republican colleagues and with our Ways and Means colleagues to pitch that tax increase to the regional average.”
“Would it be more potent of a disincentive if that tax raise was higher? Yes. I don’t think anyone disagrees that charging more is going to dissuade more people from smoking. However, given the environment we’re in, and given that this is something that we haven’t done for 20 years, It’s a place to start that conversation and to get that ball rolling.”
In addition, Au said a price increase would be more likely to dissuade young people from smoking, as they are likely to have less disposable income and be less addicted than older smokers.
“If we can disincentivize through price, a younger smoker who’s, let’s say, 18, 24, 30 years old, you really get decades worth of improved quality of life years out of that, which is what the public health data has shown,” she said.
Madison Scott, the Director of Policy and Research at the Healthy Mothers Healthy Babies Coalition of Georgia, said HB 191 could directly impact the health of mothers in this state. Especially mothers in rural parts of Georgia who may struggle to find health care and take to smoking as a way to cope with stress.
“Tobacco use in pregnancy leads to preterm birth, to miscarriages, to stillbirths and many more unsavory outcomes,” Scott said.
Scott hopes that the funding generated from the tax would be allocated toward preventative measures to deter tobacco use amongst pregnant women across the state.
Republican Rep. Trey Kelley from Cedartown challenged Scott’s stance saying a 20 cent increase would do little to deter some mothers from smoking, even if they are aware of the adverse effects.
Rep. Kelley was not alone in his dissenting opinion toward the bill.
Rep. Jason Ridley, a Republican from Chatsworth, had much to say about the pitfalls the bill presents, claiming citizens residing in border communities could easily travel to another state to save on tobacco costs.
“When we start taxing people, I don’t care if it’s a penny, for something they want to do. That’s the most un-American thing I’ve ever heard of in my entire life,” Rep. Ridley said.
Others said the bill could harm businesses that rely on tobacco sales. Angela Holland, the President of the Georgia Association of Convenience Stores, said raising the taxes higher than those of Georgia’s border states, especially in the Augusta market, could have a negative impact on business.
“Let’s just say 15% of our customers purchase fuel and tobacco… even if we match the 57 cent per pack of cigarettes that’s charged in South Carolina, the tax on the basket would be putting those convenience stores at a disadvantage,” Holland said.
South Carolina is the only border state that has already implemented a tax on vape products at a five cent per milliliter rate.
More of the subcommittee’s discussion centered on the tax increase on cigarettes than it did on vaping.
Au said the fact that vapes are more popular among young people and less well-studied than cigarettes is all the more reason to discourage their use.
“Nicotine is an extremely addictive drug. We know that just from the tobacco settlement cases and just from decades — we know this,” Au said. “And it has significant neurocognitive effects, particularly on teenagers, who get hooked very early, and it really changes how the brain is wired. So increasing the state tax on vaping products, again, is disincentivizing users who are the most sensitive to price and getting more quality life years out of it, because I don’t even think that we understand the full effect, because it’s relatively new, of vaping harms.”
One out of every four high school students report vaping, according to the Georgia Academy of Family Physicians.
Dr. Huang said recent evidence has demonstrated that increasing vape taxes will lead to decreased use of vapes, but studies also show that higher vape taxes may inadvertently lead to some users switching to cigarettes.
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