Michigan, Colorado Governors Propose Cigarette Tax Hikes

LANSING, Mich. -- Gov. Jennifer Granholm will call for a 75-cent per pack increase in the state's cigarette tax in her budget plan Thursday to help avert a $1.3-billion deficit in the next fiscal year, reported the Detroit Free Press.

The tax on a pack of cigarettes would rise to $2 from $1.25. The increase would generate an extra $295 million in tax revenue, according to the state Department of Treasury.
Michigan then would have the second-highest tobacco tax, behind New Jersey's $2.05-per pack tax, according to the news source.

The increase is so sharp at least one retailer predicted a change in smokers' habits. Rick Hurd, an owner of Humidor One in Southfield, Mich., said if the proposal passes, more smokers will roll their own cigarettes.

At its current rate, the state's $1.25-per-pack cigarette tax brings in about $860 million a year. About half of the money is earmarked for public schools, reported the news source.

A person close to the administration said Granholm believes that raising the cigarette tax would accomplish two goals:

* It would help reduce the deficit and avoid deeper cuts in Medicaid.

* $30 million of the new revenue would pay for programs to help people stop smoking and to combat chronic diseases.

"The governor wants to promote health and avoid cutting health care to the state's most vulnerable people," said the person, who spoke on condition of anonymity because of the sensitivity of the tax issue. Also, the tax increase would discourage more smokers because of the cost. Citing national health studies, the administration said the higher cigarette tax would result in 150,000 fewer smokers in Michigan -- 94,000 of them teen smokers.

If her plan is approved, Michigan would join 31 other states that have raised cigarette taxes in the past two years to offset budget shortfalls.

Similarly, two Colorado lawmakers want to ask voters in November to raise the state tax on a pack of cigarettes by 50 cents, according to the Rocky Mountain News.

They hope to introduce a bill in the Colorado General Assembly for a $128 million tax increase, with the revenue being earmarked for three health care programs. A majority vote in the two houses would put the issue on the ballot.

Voters rejected a similar tax increase in 1994, but Sen. Bob Hagedorn (D-Aurora) and Rep. Bob Briggs (R-Westminster) said it's time to try again.

"A lot of things are different in 10 years," Hagedorn said. "The attitude toward smoking has changed as well."

Briggs, noting that Colorado's 20 cent tax per pack is among the lowest in the nation, said he will introduce his bill next week, according to the news source.

If approved, it would move Colorado from its rank of 43rd in state excise tax rates on cigarettes to 22nd, he said. At convenience stores in Denver, cigarettes sell for $2.50 to $3.90 per pack.