ANNAPOLIS — Maryland health advocates are lauding Gov. Martin O’Malley’s proposal to increase the state’s cigar tax, but critics say such an increase would create another financial burden for consumers and business owners.
Mr. O’Malley, a Democrat, proposed a state budget Wednesday that would raise the 15-percent excise tax on cigars, smokeless tobacco and other noncigarette tobacco items — a group collectively known as other tobacco products (OTP) — to 70 percent.
The OTP tax has gone unchanged since 1999 while the cigarette tax has gone from 36 cents to $2 a pack during that period.
Health advocates argue raising the OTP tax will reduce tobacco use and reverse a decade-long trend of underage smokers turning to relatively cheap cigars and chewing tobacco rather than more expensive cigarettes.
“This is a life-saving public health measure,” said Vincent DeMarco, president of the Maryland Citizens’ Health Initiative. “I think [the governor] just wants to have the same kind of success as he did with raising the cigarette tax.”
Mr. O’Malley led a successful effort in 2007 to double the cigarette tax, from $1 to $2 a pack, and state officials say tax increases have helped drive down smoking in Maryland by 32 percent in the past decade.
A poll last fall by the Maryland Department of Health and Mental Hygiene, however, showed many teens are turning to cigars after being priced out of cigarettes.
The governor’s proposed tax hike would raise the price of a $1.49 cigar to about $2.20. Budget analysts project the increase will bring the state an extra $20 million next year.
If the General Assembly keeps the measure in its final approved budget, it would go into effect July 1.
Mr. DeMarco, a health lobbyist who has successfully led efforts to raise the state’s taxes on cigarettes and alcohol, thinks Mr. O’Malley was swayed largely by the DHMH report and lobbying efforts.
Mr. DeMarco had planned to push for a bill in this year’s assembly to raise the tax, but its inclusion in the budget eliminates the need to do so.
The governor’s support gives the tax a stronger chance of ending up in the final budget, though tobacco lobbyists and opposing lawmakers could push for its removal.
Mr. DeMarco has said he hopes to push for another cigarette tax increase to as much as $3 a pack by 2015.
Many Republicans and business leaders have railed against the proposal and other so-called “sin taxes,” arguing they don’t curb behavior as much as they drive up costs for consumers, reduce in-state sales and force shoppers across state lines.
“It’s all about revenue and has nothing to do with actually saving lives,” said Delegate Michael D. Smigiel Sr., Cecil Republican. “The simple economics are that it doesn’t produce additional revenue. People will go to Delaware and buy their cigars, bread, milk and gas.”