The Alabama House of Representatives passed a bill Thursday that will increase cigarette tax in Alabama, potentially bringing in $66 million to the state’s general fund budget.
As the clock continues ticking towards the Sept. 30 deadline, legislators reconvened last Tuesday for a special called session seeking solutions for the nearly $200 million budget shortfall faced by lawmakers.
Proponents are hailing the legislation, HB3, as lifeline that could help bring the budget back into the black.
Rep. Connie Rowe, R-Jasper, sponsored the bill and believes the 25-cent increase for a pack of cigarettes is the most crucial piece of legislation passed this year by state lawmakers. “This is definitely going to make a dent,” Rowe said. “But there has definitely been opposition within the Republican Party.”
The bill passed the House with a narrow 52-46 vote. Historically, Republican lawmakers in Alabama have fought adamantly against tax increases. “I understand that approach. I can appreciate that. But while they have a fundamental opposition to tax increases, I am fundamentally against being a member of a legislature that doesn’t pass a budget for an operational government,” Rowe said over the phone.
Sometimes tough times call for tough decisions, Rowe continued. However, she believes the potential benefits for the bill outweigh the negative, as some legislators said during Thursday’s debate that the tax increase will lead to a 5 percent decrease in tobacco sales throughout the state.
Rowe thinks this should be seen as a good thing and not a point of contention. “We should want to be part of the solution, as opposed to part of the problem,” Rowe said.
In Alabama, smoking related illness costs the state’s healthcare system an estimated $1.88 billion dollars. Before the passage of the bill, Alabama was ranked 48th in the country in terms of tobacco tax rates according to data from the Center for Disease Control.
Whereas Rowe said she did not enjoy having to raise taxes, she was elected to represent a district that has a great need for state services such as public and mental health care. Those services face an uncertain future as the deadline for the budget approaches.
“People expect these services and many of them depend on them. Something needed to be done and I think this is a huge step in the right direction,” Rowe said.
On Wednesday, before the House passed HB3, the Jefferson County Department of Health passed a resolution supporting an increase in tobacco tax. Whereas the bill stopped short of increasing the tax on cigars and vaporizers, Jefferson County Health Officer Mark Wilson believes the tax increase could reap tremendous health benefits for the state on top of providing a viable solution to the budget crisis.
Wilson, a long time advocate for a tax increase on tobacco products, said, “If we are looking at how much tobacco is costing the state, this is a logical step,” Wilson said on Wednesday. “We’re not here to tell the legislature how to do their job, but this is definitely a concern we’ve had for some time.”
Wilson said, however, that the 25-cent increase is not enough and should be raised even more. “If you want to really change the public aspect of things, [cigarette tax] should be substantially increased in order for it to be a disincentive,” Wilson said.
According to the resolution passed by the JCDH, 8,500 people die each year in Alabama due to tobacco related diseases. As a result, ‘’Smoking-caused productivity losses in Alabama are equivalent to $2.71 billion,’’ the resolution read.
This is not the only tax increase measure debated this week by legislators. On Thursday, lawmakers passed five bills, including the cigarette tax that could potentially have a $180 million a year impact in state revenue.
The other measures passed include: A 15-cent pharmacy tax added to each prescription; A $13 increase to automobile title fees; A 2 percent car rental tax, up from 1.5 percent; A nursing home bed tax, totaling roughly $400 per bed.
Also, a bill made it through a House committee on Thursday that would put a 5-cent per gallon tax on fuel sold in the state. The increase could potentially have a $70 million dollar impact on the 2016 fiscal year.
Rowe said that Republican lawmakers have had to bite the bullet and increase taxes in spite of their historical opposition to doing so. “This is the most reasonable and logical route for us to take,” Rowe said. “We’re starting to see our way out of this.”