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Should West Virginia up amount of cigarette tax?

January 28, 2003

Should West Virginia raise its cigarette tax from 17 to 55 cents per pack? There's a strong case that it's the right thing to do, given the state's current budget woes.

Gov. Bob Wise proposed the increase again this year, saying that the $60 million it would raise would save hundreds of health-care jobs.

In addition, a spokesman for Families USA, a health advocacy watchdog group, told the Associated Press that because the state now gets $3 in federal funds for every $1 it spends on Medicaid, earmarking the cash for that purpose would yield millions for West Virginians.

Maryland and Pennsylvania have already raised their cigarette taxes to $1 a pack and Ohio has gone to 55 cents per pack, making smokes in West Virginia substantially cheaper.

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Keeping the tax at its present level could lure out-of-state buyers, according to a state tax division official quoted in August of last year by the Charleston Gazette. Mark Muchow told the Gazette that the lure of low cigarette prices could increase state revenues by $300,000 to $500,00 each year. That's potential revenue that would be lost if the tax were increased.

Another potential problem was raised by Christina Bright of Hodges and Associates, a firm that lobbies for retailers and tobacco interests. She told the Associated Press that the tax increase could lead to the sales of 50 million fewer packs each year, and the loss of 700 or more retail jobs.

It seems clear to us that because the state is able to leverage federal money with what it spends on Medicaid and because health-care jobs usually pay more than retail positions, this increase makes sense.

But what lawmakers must remember is that because every increase in price will cause some smokers to quit, raising tobacco taxes is a trick that will only work for so long.

The state's health-care costs will decrease somewhat as a result of citizens' healthier lifestyles, but lawmakers need to look ahead to find revenues to replace those lost when smokers decide their lungs - and their wallets - have had enough.

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