Tobacco-tax efforts draw unexpected support, detractors

ST. LOUIS -- Missouri's lowest-in-the-nation tobacco tax will rise if at least one of two ballot measures passes in November.

But voters seeing the onslaught of TV ads on behalf of both can be excused if they don't know what to believe.

After all, tobacco companies largely are financing the campaigns for both tax measures, spending nearly $18.5 million combined.

Equally counterintuitive is the fact many health organizations, who would figure to support higher taxes for something as unhealthy as smoking, oppose both the Nov. 8 ballot proposals.

Amendment 3 would add 60 cents to Missouri's 17-cent-per-pack tobacco tax, phased in through 2020.

The competing Proposition A would raise the tobacco tax 23 cents, phased in through 2021.

In both cases, Missouri's tax would remain well below the national average of $1.65 per pack.

If both tax hikes pass, it's uncertain which one -- or whether both -- would be implemented. Representatives for the secretary of state and attorney general agreed the matter likely will be decided in court.

Some are puzzled why tobacco companies are supporting cigarette-tax increases. Reynolds American Inc., parent company of the R.J. Reynolds tobacco company, has spent $12.4 million to back Amendment 3. Money generated by the tax, estimated at about $300 million annually, would go to early-childhood education.

Jane Dueker, spokeswoman for Vote Yes On Three For Kids, said just 3 percent of Missouri's 4-year-old children attend publicly funded preschools.

"We're way behind every surrounding state in early childhood education," she said.

But Big Tobacco has a financial stake, too. A provision of Amendment 3 would hurt smaller competitors by imposing an additional 67-cent-per-pack tax on top of the 60-cent hike imposed on the major brands, on discount brands of cigarettes left out of a 1998 tobacco-lawsuit settlement.

In the settlement, the major tobacco companies agreed to pay at least $206 billion over 25 years to 46 states for health-care costs related to tobacco. As a result, major tobacco firms pay millions of dollars annually to Missouri, but smaller competitors do not.

Smaller tobacco companies, not surprisingly, oppose Amendment 3. Two of them largely are financing the effort behind Proposition A: Cheyenne International and XCaliber International each have spent about $3 million to support Proposition A and oppose Amendment 3.

The $100 million generated annually by Proposition A would fund transportation projects.

Ron Leone, executive director of the Missouri Petroleum Marketers and Convenience Store Association, said Proposition A offers a fair tax increase but one that would not be as harmful to businesses and consumers as Amendment 3.

He said the additional 67-cent per pack tax on smaller tobacco firms would be unfair.

If Amendment 3 passes, the neighboring states of Nebraska, Kentucky and Tennessee would have lower tobacco taxes than Missouri. Smokers who cross from other states into Missouri because of the lower tax also spend money on gas and other goods, Leone said.

The association is pushing Proposition A because, after years of calls for higher cigarette taxes, "we wanted to take control of our own fate," Leone said. "And we wanted to kind of put the issue to rest for the foreseeable future because we're fighting tobacco taxes every couple of years, whether it's in the legislature or at the ballot box."

Several health organizations oppose both measures, including the American Cancer Society Cancer Action Network, the American Heart Association, the American Lung Association and others.

Both tax increases "are not large enough to have a public-health impact," said Leah Martin, director of advocacy in Missouri for the American Lung Association. "Taxes only work when they are large enough to deter you from starting smoking, or to stop people currently smoking from purchasing cigarettes."

Missouri Cures, a not-for-profit group that promotes stem-cell research and other medical advances, cites a provision of Amendment 3 that prohibits using the funds for abortion-related purposes or for "therapies or cures using human embryonic stem cells ... ." It also prohibits funding for "tobacco-related research of any kind."

Dueker defended the provision. She said there's no need to fund more tobacco research because the harmful ramifications of smoking are well documented.

As for the abortion and stem-cell provisions, she said medical research organizations had sought to share in the tax money, requiring the ballot language to make it clear the funds are strictly for early childhood education.

Proposition A's language has critics who question a poison-pill clause that wipes out the tax increase if another tobacco tax is placed on a Missouri ballot -- even a local ballot. Leone said that provision is aimed at avoiding the risk of double taxation.

"So if we're going to be taxing ourselves, we wanted to make sure that in a year or two there isn't another initiative petition," he said.