Big Tobacco may stay out of Missouri's cigarette tax increase fight
The Kansas City Star
That prediction I made last week that Missouri is about to see a torrent of cash from Big Tobacco in anticipation of a ballot initiative raising the cigarette tax?
Maybe not so much.
Maybe not at all.
Money from large cigarette manufacturers helped to narrowly defeat a ballot measure to raise Missouri’s tax on tobacco products in 2006. Reynolds American Inc. singlehandedly came through with $2.2 million.
But people on both sides of the campaign have told me they expect big cigarette companies to sit out this year’s ballot initiative, which calls for a 73-cent increase in the tax on a pack of cigarettes, bringing the total tax to 90 cents.
That’s because the proposed initiative contains something that Big Tobacco likes even more than it dislikes higher prices on its products. (Though even with the proposed increase Missouri’s tax would be well below the national average of $1.49 cents a pack.)
Along with calling for a tax increase and designating a formula for spending the money that would be raised, the proposed initiative closes a loophole in a 1998 legal settlement among states and tobacco manufacturers.
At that time, four members of the club of Big Tobacco agreed to make annual payments to states in exchange for being exempt from future lawsuits over health care costs caused by smoking. A number of other cigarette companies signed on to the agreement later.
Some smaller manufacturers declined to enter the agreement, but were required to make annual payments into state escrow accounts, in anticipation of future legal judgments. Those firms, known as “nonparticipating manufacturers,” figured out that if they concentrated their sales in just a few states, they could recover nearly all of their deposit at the end of each year. And guess where their favorite state would be? Well, Missouri, of course. Land of cheap cigs and lawmakers easily intoxicated by lobbyist-blown smoke.
Missouri is the only state that hasn’t passed legislation to close the loophole giving non-participating manufacturers an unfair advantage in the market. Attorney General Chris Koster and his predecessor in that office, now-Gov. Jay Nixon, have warned lawmakers that their failure to act on the discrepancy puts the state in legal danger of having to reimburse money to the big manufacturers which have paid into the agreement. All to no avail.
A year ago, large cigarette manufacturers filed an initiative petition with the secretary of state’s office to raise the tax on products sold by the non-participating manufacturers. They never gathered signatures, however. But the initiative circulated by a large coalition of health, education and other groups would even the playing field for them, even if they have to swallow a tax increase.
That’s not to say a higher tax won’t face a tough fight. Small tobacco companies and convenience stores are expected to mount fierce opposition.
We should know within the next two weeks whether the backers of that resolution have gathered enough signatures to get their measure on the November ballot.