House panel hears perceived pros, cons of raising cigarette tax

A vote for raising the cigarette tax is a vote against cancer – or a vote in favor of organized crime, depending on who you talk to.

That’s the choice lawmakers on the House Taxation Committee were presented with Thursday at a hearing on Gov. Sam Brownback’s proposal to add $1.50 in tax to the price of a pack of cigarettes.

The main witness in favor of the tax increase was Roy Jensen, director of the University of Kansas Cancer Center.

Although the tax increase is aimed at generating more money for the state, “the most important components are the health benefits that will derive from it,” Jensen said.

He said smoking rates remain “persistently high” in Kansas, at about 20 percent of the population, and the tax increase would “cause about 50,000 people to either not take up smoking or quit smoking.”

He said that would make an appreciable impact on cancer rates in the state, particularly as the population ages.

The proposed tax increase would raise the state tax on cigarettes to $2.29, which is $2.12 higher than in neighboring Missouri.

That $21 difference per carton is more than enough to drive not just casual cross-border buys by individual smokers but to attract smuggling by gangs, the Mafia and even terrorists, said Rich Marianos. He’s a former assistant director of the federal Bureau of Alcohol, Tobacco, Firearms and Explosives who now splits his time between teaching at George Washington University and consulting for the American Reynolds tobacco company.

A carload of cigarettes brought across the state line could generate thousands of dollars in illicit profits, and a semitrailer load could generate hundreds of thousands, he said.

“They could sell them at a flea market, out of the trunk of a car in packs, they can sell them in duffel bags at schoolyards, they can sell cartons, cases,” he said. “It just depends on the marketplace, the type of criminals and the scheme.”

The hearing had a moment of levity when Bill Nigro, a Kansas City-area businessman who has a Missouri-side smoke shop as one of his tenants, urged the Kansas lawmakers to pass the tax – to benefit Missouri business.

“I can’t tell you how delighted he is … that you guys are going to put this tax on, because it’s going to help his (sales) run big time, and he couldn’t be more excited,” Nigro said of his tenant.

He said the shop owner has asked him to find a second location closer to the state line.

“I’m all in favor of this new tax,” he said. “I think it’s going to help us on the Missouri side really, really well.”

That prompted the committee chairman, Rep. Marvin Kleeb, R-Overland Park, to comment: “I’m not sure whether we should have had you go as an opponent or a proponent.”

This story was originally published February 19, 2015 at 8:22 PM with the headline "House panel hears perceived pros, cons of raising cigarette tax."