Measure 4 aims to decrease smoking rates, but opponents fear $70 million annual 'blank check'
FARGO—A proposed increase in the state's tobacco tax could bring in $70 million each year, but that isn't why proponents put it on the ballot.
Measure 4 would raise taxes from 44 cents to $2.20 per pack of cigarettes and boost the wholesale price tax on cigars and tobacco products from 28 to 56 percent. The idea was pitched to legislators in 2015 to lower the youth smoking rate by about 20 percent, Eric Johnson said.
"That's what we've seen in almost every other state that has increased their tobacco tax," said the family practice physician and spokesperson for Raise It for Health ND, a coalition that includes about 40 partners such as statewide groups and the American Lung Association.
But the chairman of North Dakotans Against the 400% Tax Increase, which includes as partners tobacco companies Altria Group and R.J. Reynolds, said the measure doesn't explain how revenue would be spent.
"Writing a $70 million blank check to a group such as this with no real control on the spending of it just isn't how North Dakotans do business," said Mike Rud, president of the North Dakota Petroleum Marketers Association and the North Dakota Retail Association.
Three policies reduce smoking rates, Johnson said: a strong smoke-free law, which voters approved in 2012; a properly funded tobacco prevention and control program, which voters approved in 2008; and increased tobacco taxes.
North Dakota is the only state that now meets the Centers for Disease Control and Prevention's funding recommendations for tobacco control efforts, he said.
When lawmakers didn't advance the 2015 proposal for a tobacco tax increase, Johnson said proponents worked toward a ballot measure, and leaders of veterans groups also planned to go to the ballot to raise the tax for funding.
"If the Legislature felt they didn't need the money, these veterans groups were certainly a worthy benefactor," he said.
If approved, Measure 4 would go into effect Dec. 8. The Legislative Council estimates it would raise an additional $141.7 million in the 2017-2019 biennium, with $86.9 million going to the veterans tobacco trust fund, $86.9 million to the community health trust fund and $700,000 to the state aid distribution fund.
Rud said the measure represents "bad tax policy." Nine pages of text include changes to the Century Code, he said, while only a handful of sentences specify spending.
Johnson said it needs to be tax code-compliant, and that language was developed by the Legislative Council in 2015.
He also said the measure does specify spending. Half would go to a 15-member veterans fund committee that would create a strategic plan, he said, and the rest would go to a community health trust fund with 70 percent for the behavioral health comprehensive plan.
Rud said proponents' claims are misleading.
"None of us want to see kids start smoking, but they really in my estimation can't in all due conscience sit there and tell me that they know how this money's going to be spent when they're not going to be on those committees," he said.
If approved, the measure could create a regressive tax affecting lower-income residents, Rud said.
Johnson said it's true that people earning less are more likely to smoke, but when taxes go up, that demographic tends to quit at higher rates.
"It's not this big philosophical struggle of whether they will buy milk for their kids or not," he said, adding the state has a well-funded cessation program.
But Rud said it would affect people who can least afford it. He cited a 2012 study by research firm RTI International that found 33.7 percent of Americans with a household income of $30,000 or less smoke, compared to 12.2 percent of those earning $60,000 or more.
"If we need to help the veterans, we all need to pitch in on that and not punish a small group or portion of our population with a sin tax," Rud said.
On Monday, Oct. 24, Raise It for Health ND announced it filed a formal complaint with the Bismarck Police Department over what it called "misleading" and "illegal" tactics by North Dakotans Against the 400% Tax Increase.
A news release said the opposition group omits the word "tobacco" from most campaign materials. The complaint also rebuffed claims the measure would cause a $70 million tax hike because that's a projection of new revenue from sales, not a firm tax increase.
"The opposition's campaign follows a deliberate pattern of misleading voters that violates North Dakota election law, and demonstrates a complete lack of respect for the integrity of our electoral processes," Kristie Wolff, program manager for tobacco control with the American Lung Association in North Dakota, said in a written statement.
Rud said the opposition group wouldn't comment on the complaint Monday.