Gov. Deval L. Patrick will propose increases in state tobacco taxes next week, including a 50-cent-per-pack hike in the cigarette tax and imposition of new taxes on cigars, roll-your-own tobacco, pipe tobacco and smokeless tobacco. The cigarette tax would give Massachusetts taxpayers the fifth-highest cigarette tax in the country and bring the tax on a pack of cigarettes to $3.01. David E. Sullivan, general counsel for the state Executive Office for Administration and Finance, said yesterday that the new tobacco taxes are expected to bring in $72.5 million a year in new state revenue.

Those funds will be used to cover almost half the cost of the estimated $150 million in health insurance subsidies for legal immigrants the state is required to pay by a recent Supreme Judicial Court ruling.

The cigarette tax is among $260 million in tax and fee increases and other money-making measures Mr. Patrick will propose Wednesday as part of his 2013 fiscal year budget.

Mr. Sullivan said about $62.5 million would come from the cigarette tax hike and about $10.4 million from new taxes on other tobacco products.

The governor is also reviving proposals previously rejected by the Legislature to eliminate the sales tax exemption on candy and sweetened soft-drinks and soda that would subject those products to the state’s 6.25 percent sales tax. Estimates are that the candy and soda tax would generate $61.5 million annually, which would be directed to public health programs.

Mr. Patrick will also propose expansion of the bottle bill to require deposits on noncarbonated drinks and bottled water, which would be expected to bring the state about $23 million in unclaimed deposits. Of that amount, about $5 million would be allocated to improved coordination of local recycling programs.

Other money raisers he will propose include:

•$5 million in new revenues from advertising on state websites and vehicles.

• $5.8 million from fee increases for new licensing of adult day care providers.

• Expanded nursing home fees.

• Increases in environmental permit fees.

• $46 million from postponing a tax deduction for large multistate corporations.

• $10 million from changes in the way the state apportions payroll and sales factors in determining corporate taxes.

•$7 million in new taxes from markup of hotel room costs booked through out-of-state, internet-based reservation companies not previously taxed.

•$500,000 from elimination of a tax deduction for losing lottery tickets.

• $23 million from the use of new technology to better enforce state tax collections and identity taxpayers who underreport income.

SMOKERS and consumers of alcoholic beverages have again been hit with increased taxes as government seeks to raise an additional $772 million for the 2010/11 fiscal year. The increases take effect today.
Finance Minister Audley Shaw, who unveiled the new measures in Parliament yesterday, said the increased taxes will “assist the government in meeting its revenue targets for the 2010/2011 fiscal year”.

Shaw said a single specific Special Consumption Tax (SCT) of $960 per litre of pure alcohol will be applied to beers and stouts, wines (including beverages commonly known as tonic wines), cordials, liqueurs, vodka, whiskey, brandy, gin, underproof and overproof rum, except white overproof rum.
The finance minister told the House that studies have shown that the ad valorem and SCT charged on alcoholic beverages severely distorts competition within the local alcoholic beverage sector, frustrates responsible drinking efforts and unfairly penalises the beverages that have the lowest alcohol content.
The administration, in its 2009/2010 budget, increased the SCT on underproof distilled spirits. However, the SCT on overproof spirits and wines, cordials and liqueurs remained unchanged.
In the meantime, Shaw said a special regime would be put in place to maintain the existing SCT rate of US$0.40 per litre on wines, cordials and liqueurs imported directly or taken out of bond by hotels or resort cottages registered with the Jamaica Tourist Board. He said white overproof rum will attract a $450 SCT per litre of pure alcohol. This measure, he said, is expected to yield $618 million.
And an additional $54 million will be culled from an increase in the Additional Stamp Duty (ASD) on brandy, whiskey, gin and vodka. The finance minister said these will attract a single ad valorem rate of 35 per cent.
Meantime, $100 million will come from what Shaw yesterday described as a reform of the tax structure on tobacco products. According to the finance minister, a 2008/09 reform of that structure had only applied to cigarettes containing tobacco and cigarettes containing tobacco substitutes. Cigars, cigarillos and cheroots were not affected, he said, creating a loophole in the law where cigarettes were being imported under the guise of cigars, cigarillos and cheroots, among other things.
He said the uniformed tax treatment for the products would plug the loophole.
“Cigars, cheroots and cigarillos of tobacco and tobacco substitutes will now attract the same tax treatment as cigarettes,” Shaw said.

THE IRISH Cancer Society and Irish Heart Foundation came together yesterday to urge the Government to increase tax on tobacco by 50 cent in the budget. Increasing tax by this amount on loose tobacco and cigarettes would generate €85 million in much-needed revenue for the State, they said, while at the same time higher prices would help encourage existing smokers to quit and discourage young people from experimenting with tobacco. The charities want to see €12 million of the money raised in tax to be ring-fenced for smoking cessation programmes.

Kathleen O’Meara, head of advocacy and communications at the Irish Cancer Society, said our health services spend €2 billion each year treating tobacco-related illness. “So if we reduce prevalence we don’t just save lives, we also reduce the massive cost of treating the harmful effects of smoking addiction,” she said.

In their pre-budget submission, the charities also called for a comprehensive package of measures to tackle tobacco smuggling, which could potentially save the exchequer about €67 million each year.

Based on 2009 receipts, the Department of Finance estimates the exchequer loses €200 million in duty each year due to the illicit trade in tobacco.

Chris Macey, head of advocacy at the Irish Heart Foundation, said a three-pronged approach is required to tackle smoking prevalence, including price increases for tobacco products, comprehensive smoking cessation programmes and stronger smuggling controls.

“If we don’t tackle smoking rates by helping people to quit, we are in grave danger of seeing the benefits of the very progressive anti-tobacco legislation we have introduced seriously undermined, with addiction and inevitably deaths from tobacco, increasing,” he said.

Irish smoking rates remain stubbornly high, at 29 per cent, and 16 people die every day in Ireland from the effects of smoking.

Organization, increasing taxes on tobacco and alcohol and imposing levy on foreign exchange transactions could provide funds for the health-care of a number of people across the globe, who cannot afford the same. The WHO released its annual World Health Report today, which included that due to health-care costs, around 100 million people a year have to face impoverish conditions.

“Governments worldwide should also increase the proportion of health-care costs they cover to reduce out-of-pocket expenses for patients whose illnesses can subject them to financial catastrophe”, said the report.

The reasons that contribute to increasing health care costs include aging populations, rising cases of chronic disease such as cancer and diabetes and the peaking up costs of treatments. So, in order to save millions of lives and protect a number of people from entering into poverty, there is a need to raise funds, cut direct payments and upgrade efficiency.

The WHO stated that with 50% increase in tobacco excise taxes, there would be generated $1.4 billion in 22 low-income countries and the imposition of 0.005% on currency transactions in India alone could help collecting about $370 million a year. So, these sin taxes, along with providing funds for the care of needy, would also help cutting consumption of harmful products.

German Chancellor Angela Merkel’s government plans to raise tobacco taxes over the next five years, generating as much as 1 billion euros ($1.4 billion) in fresh revenue for the federal budget by 2015. The tax on cigarettes, rolling and pipe tobacco would be levied from 2011 and make up for falling tobacco tax revenue as Germans smoke less, opt for cheaper brands or turn to smuggled products, the Finance Ministry said today in an e-mailed statement.

Merkel’s coalition, seeking to shrink the budget deficit with about 80 billion euros of cuts and revenue-raising measures, agreed late yesterday to water down planned cuts to energy subsidies for companies with the difference in part to be made up with the tobacco-tax increase. That prompted opposition criticism Merkel is shifting the tax burden from companies to taxpayers.

“This is completely the wrong direction to take, both economically and ecologically,” Alexander Bonde, the opposition Greens’ budget spokesman in parliament, said on MDR Info. “The government has given up its plans under lobby pressure.”

Finance Minister Wolfgang Schaeuble had planned to recoup 1.5 billion euros annually from cutting subsidies for energy- intensive companies such as the chemicals industry, prompting the BDI industry lobby to warn that as many as 870,000 jobs were at risk. Schaeuble will instead raise about 500 million euros from the energy tax next year, Bild newspaper reported today.

Germany’s VCI chemical-industry association welcomed the government decision as a return to “economic sanity,” according to an e-mailed statement.

The tobacco-tax increase will take place incrementally from 2011 to prevent smokers from rushing to cheaper brands, the Finance Ministry said. It will also raise the levy on less-taxed products faster to avoid price distortions. A pack of 19 cigarettes will be taxed 4-8 cents more per year, while a 40 gram (1.4 ounces) pack of loose tobacco will be levied 12-14 cents a year.

Beginning next year, the government will raise a predicted 200 million euros through the tax, rising to 1 billion by 2015.

The tax increase on tobacco last week prompted a record number of smokers to reach for the phone rather than their cigarettes.
Tobacco tax rose 10% from midnight last Wednesday, raising the price of a packet of 20 cigarettes by about $1.

Further 10% increases will go through on January 1 next year and January 1, 2012.

Loose tobacco was hit with an immediate 14% increase to bring it into line with cigarettes.

Quit Group senior communications adviser Chris Pitt said the tax increase was “the kind of trigger a lot of people needed” to quit smoking.

Quitline received a record 860 calls and 395 website visits on Thursday.

“We spoke to more people in one day than we ever have before,” he said.

Three times as many registrations than usual took place between Thursday and Sunday, with 2500 people registering for the Quitline programme.

Traffic volumes were expected to level-out but the response had been great, he said.

The programme had a 21% success rate, as it took an average of six attempts to quit, compared with a 4% success rate for going “cold turkey”.

“Although it’s becoming more expensive to smoke, it’s never been cheaper to quit,” Mr Pitt said.

Mornington Pharmacy intern pharmacist Jason Burgess had noticed a “slight increase” in the number of people coming in for assistance with quitting.

Some people he had spoken to credited the tax increase with pushing them to give quitting another go.

High-strength patches and gum, which were Government-subsidised, were popular, he said.

Unichem Knox Pharmacy pharmacist and owner Trudy Scott-Walker said the pharmacy had been busy during the past month with customers wanting to quit smoking but the tax increase had not made a significant impact.

Other pharmacies contacted had also not noticed any change in the number of customers want to quit smoking.

By Ellie Constantine, Otago Daily Times

Area stores unhappy with tax-free sales of cigarettes by the Oneida Indian Nation have found a powerful ally — one of the world’s largest tobacco companies.

“The state loses revenue. Retailers lose sales. Their employees could even lose jobs. And it adds to the burden on hard-working taxpayers,” reads a recent full-page advertisement paid for by Altria Client Services on behalf of Philip Morris USA. The ad was published in various Upstate New York newspapers.

The ad pictures large hands cradling sand, with grains falling between the fingers.

Oneida Nation officials say they feel betrayed by the stance Philip Morris has taken – saying it’s a reversal of the company’s previous position, which in the past has provided racking and signage to SavOn and other Indian stores.

“They were like a big brother almost, who has turned around and smacked us for some reason,” said Bob Hilburger, director of business development for the Oneida Indian Nation.

Tobacco industry officials say the ads and the website, Enforce The Law – Collect The Tax Coalition, are not questioning the sovereignty of Indian nations such as the Oneidas, who have built a commercial empire in the western portion of Oneida County and in eastern Madison County, complete with a casino, hotels, restaurants and convenience stores.

“It’s really about the policy issue of tax collection,” said David Sutton, spokesman for Philip Morris USA. “It’s about leveling the playing field.”

‘Need for revenue’

There have been several similar coalitions formed throughout the years to peddle the same kind of message, said James Calvin, president of the New York Association of Convenience Stores.

Why does Calvin hope this one will have better results?

For one, he said, the effort now has “the leadership and participation of Altria,” which sells close to half of U.S. cigarettes.

Also, the state has a vested interest to collect these taxes now to close its potential $9 billion budget gap, Calvin said.

The sale of untaxed cigarettes from Indians to non-Indians has been a longstanding issue – especially in Upstate New York.

The initial promise to collect those taxes on Indian cigarettes was made by then-Gov. George Pataki, who pulled back from the measure in the 1990s after about 1,000 members of the Seneca Nation blocked the Thruway and other roads — sometimes with burning tires.

Gov. Eliot Spitzer campaigned for governor on the same promise, but backed away once in office, leaving a gap in the 2007-08 state budget.

Now, Gov. David Paterson is giving collecting the revenue another shot, looking to enforce a law he signed in December 2008 in Utica.

Recently proposed state regulations would limit the quantity of tax-free cigarettes that may legally be supplied to Indian nations or tribes.

‘Death notice’

But the longer this tax goes uncollected, the more it is hindering local convenience stores, Calvin said.

“You lose the sale of cigarettes, and you lose the sale of other products,” he said.

Sutton said his company is looking out for the interests of such stores.

“If you have one pool of retailers that we’re obviously working with every day, and have another pool of retailers who are not colleting the tax, it’s very difficult to compete,” he said.

As for the Nation, it has already made the decision to downplay product placement of Philip Morris’ Marlboro cigarettes in SavOn stores, Hilburger said.

“Obviously you’re not going to support someone to run expensive ads in the paper,” Hilburger said, adding of the advertisement, “It almost looked like a death notice. It was 85 percent black.”

By JENNIFER FUSCO, Uticaod

Georgia lawmakers, health-care advocates and business leaders are united in opposing a proposed “bed tax” on hospitals to shore up a financially struggling Medicaid program.

What they don’t agree on is where to find $247.8 million to replace the revenue the tax would raise, money Gov. Sonny Perdue is counting on to help balance a recession-ravaged fiscal 2011 budget.

“There’s no consensus on what to do to fill the hole, it’s so big and bad,” said Rep. Ben Harbin, R-Evans, chairman of the House Appropriations Committee. “Medicaid is in such bad shape, we’ve got to come up with revenue for that.”

The governor is recommending a 1.6 percent tax on hospitals’ net revenue to help plug a projected $506 million Medicaid shortfall driven by growing demand for services and the impending loss of federal stimulus funds.

Rhonda Medows, commissioner of the Georgia Department of Community Health, gave lawmakers an either-or choice last month: approve the bed tax and accompanying fees on managed-care organizations or slash Medicaid reimbursements to all health-care providers by 16.5 percent.

But opponents see that as a false choice. Rather than offsetting the bed tax revenue with spending cuts, they would prefer to replace it with other taxes, more aggressive tax collecting or with savings from other areas of the Medicaid budget.

One possibility is raising Georgia’s tax on cigarettes and other tobacco products.

Perdue pushed a 25-cents-per-pack increase in the tax through the General Assembly in 2003 during a milder recession than the current downturn. That brought the tax per pack to 37 cents. Now, health-care advocates are calling for an additional $1-per-pack tax.

Kevin Bloye, spokesman for the Georgia Hospital Association, said there’s logic in scrapping a tax on hospitals and replacing it with a higher tobacco tax because smoking contributes to health-care costs.

“Why are we taxing organizations that make us well and not products that make us sick?” he asked.

Bert Brantley, a spokesman for Perdue, said the governor considered raising the tobacco tax when he developed his budget recommendations late last year.

But Brantley said a higher tobacco tax would have diminishing returns for the state because it would reduce smoking and, thus, tobacco tax revenue. “You end up collecting less than anticipated because demand goes down,” he said. “That’s good public policy, but you end up with a hole.”

Harbin said the only way to sell a tobacco tax hike to a tax-averse legislature would be through tieing it to health care. But he said he’s not convinced that argument would sway enough lawmakers.

While the tobacco tax doesn’t appear to be gaining traction, legislative leaders are giving a better reception to bringing in more tax revenue by giving the state more tax-collecting tools.

The House version of the amended fiscal 2010 budget includes $342,000 to hire more investigators and auditors for the Department of Revenue.

Also, House Republican and Democratic leaders have introduced bills to let cities and counties share information with the state agency, making it easier to identify and go after businesses that aren’t remitting sales taxes to the state.

“(Consumers) are paying the taxes, but they’re not being collected. We’re talking about cheating,” said House Minority Leader DuBose Porter, D-Dublin, chief sponsor of the Democrats’ bill. “It (also) would ease the pressure in this budget.”

But Brantley warned that relying on a sales tax crackdown would be risky because it’s uncertain how much additional revenue could be collected.

He said there’s also no guarantee that additional sales taxes brought in through more aggressive collecting would go toward Medicaid and not other cash-strapped state agencies.

Proposals put forth by the Georgia Chamber of Commerce would directly affect Medicaid because they would generate savings inside the program.
Chamber President George Israel, a former managed-care industry executive, said more serious efforts to prevent Medicaid fraud and abuse could save the state $100 million.

Israel also suggested big savings could be had if the Department of Community Health got more aggressive with its disease management programs.

“Seventy to 80 percent of the cost (of Medicaid) comes right out of chronic disease,” he said. “They haven’t exhausted the options.”

In response, the Department of Community Health issued statistics showing that the agency’s Medicaid fraud-and-abuse program has generated millions in savings in recent years.

Brantley said a key advantage to the hospital tax is that the revenue would be plowed back into the Medicaid program.

He also noted that the state revenue would be matched by larger drawdowns from the federal government.

Because of that federal match, hospitals serving large numbers of Medicaid patients – including Atlanta’s Grady Memorial – would be net gainers.

The hospitals that would lose money typically have more paying patients.

by Dave Williams, Atlanta.bizjournals

Boise Democratic Sen. Elliot Werk wants to charge all stores selling tobacco products $150 a year to cover the cost of checks to make sure they aren’t selling cigarettes to underage buyers. Currently, stores can get a free permit from the Department of Health and Welfare (DHW) to sell tobacco products. Maintaining those permits and performing annual checks at every tobacco seller in the state costs DHW and the Idaho State Police (ISP) close to $300,000 a year.

Werk’s proposed fee on permits would cover those costs. “It’s only to recoup costs,” he said. “It’s not to be a profit center.” DHW would set the fee for tobacco stores, but said it should be about $150. Currently, money for the tobacco permits and store checks come from the general fund and the Idaho Millennium Fund. Werk said lawmakers should shift the burden onto stores. “I don’t believe that the taxpayers of the state should be picking up the cost of the annual permits or the inspections that are required,” he said. “Taxpayers are actually paying to support tobacco dealers.”

The Senate Health and Welfare Committee approved introducing the proposed fee. Sen. Joyce Broadsword, R-Sagle, opposed the plan because it may not apply to stores selling tobacco on Indian reservations. Sen. Denton Darrington, R-Declo, also said he may oppose the plan in a full hearing because it could add another fee to convenience stores.

The committee also approved introducing Werk’s proposed ban on dissolvable tobacco. The new form of tobacco, which puts nicotine in flavored strips and mints, isn’t currently being marketed in Idaho, but Werk said ads he’s seen from other states target dissolvable tobacco to children, which could prove harmful. “They do deliver enough nicotine that it could be deadly, potentially, to very small children,” he said. The flavored dissolvable tobacco strips and pieces don’t require spitting and product labels say they can cause mouth cancer. The proposal would allow people to buy dissolvable tobacco with a doctor’s prescription. The Joint Millennium Fund Committee endorsed the proposed ban during its meeting last week.

The Senate Health and Welfare Committee will need to hear both of Werk’s proposals again before they can move forward.

By Brad Iverson-Long, Idahoreporter