State House committee narrowly passes cigarette tax increase

Wednesday, February 18th 2004, 12:00 am

By: News On 6

OKLAHOMA CITY (AP) _ Gov. Brad Henry's proposed cigarette tax increase squeaked through a legislative committee Wednesday after grocery and convenience store operators said it would give tribal smokeshops an unfair advantage.

Supporters of the tax increase, including the Oklahoma Hospital Association, said the measure would raise revenue for proposed cancer treatment and trauma care centers and reduce smoking in the state.

The measure calls for a statewide vote on the tax increase.

``This is a health care issue,'' said Joy Leuthard of the Oklahoma Alliance on Health or Tobacco. ``The health of our citizens is at stake here.''

The House Revenue and Taxation Committee voted 5-4 along party lines to send the measure to the House for a vote. House Speaker Larry Adair, D-Stilwell, and Speaker Pro Tem Danny Hilliard, D-Sulphur, attended the committee meeting as ex-officio members and helped pass the measure.

Henry's proposal would increase the net tax on a pack of cigarettes by about 52 cents, said Rep. Clay Pope, D-Loyal, committee chairman. It would boost the excise tax on cigarettes while eliminating state and local sales taxes.

Pope said the bill would rebate money back to cities and towns so they will not lose any tax revenue.

Oklahoma's tobacco tax, currently 23 cents per pack, has not been increased since 1987. The national average is 73 cents per pack.

The measure would raise about $130 million, of which $100 million would be earmarked to expand health care coverage to thousands of Oklahomans. Officials believe the program would lead to more than $400 million being spent on Oklahoma health care after federal funds are leveraged.

Jim Hopper, spokesman for the Oklahoma Grocer's Association, said the bill gives tribal operations a competitive advantage.

``There needs to be a level playing field for everybody,'' Hopper said.

Mike Thornbrugh, a former state representative who is government affairs manager for Quick Trip convenience stores of Tulsa, said that under existing compacts with the state, tribes do not pay the $1.70 state excise tax on a carton of cigarettes and another $2.40 for state and local sales taxes, for a total advantage over non-Indian operations of $4.10.

That advantage would increase to $5.55 per carton under the legislation, Thornbrugh said.

``You can't fix this through legislation. It has to be fixed through compacts,'' he said.

Health care proponents said potential revenue from the measure would restore funds to Medicaid and other programs that were cut due to state budget cuts.

``We need to do something about the budget shortfalls,'' said Patti Davis of the Oklahoma Hospital Association.

Leuthard said the measure would reduce smoking and prevent the premature deaths of 26,000 teens who would become regular smokers without the tax increase.

The measure is House Bill 2660.