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Government regulation, public health at issue in tobacco tax debate

Tobacco Tax panelist participate in a discussion on the initiated measure to raise North Dakota’s Tobacco Tax. From the left is Mike Rud, Dr. Rick Becker, Bruce Sailer and Dr. Eric Johnson.

BISMARCK—Public health costs and veterans' needs were pitted against the correct level of government regulation of business during a debate over a proposed tobacco tax measure Thursday.

Proponents of Measure 4, which would increase taxes on tobacco products in the state, pitched their case before a crowd of more than 200 at the Ramkota in Bismarck during the Greater North Dakota Chamber's Policy Summit.

If approved, Measure 4 will increase the tax on cigarettes in North Dakota from 44 cents per pack to $2.20. It would be the first increase in the state since 1993. Only Georgia, Missouri and Virginia have lower tobacco taxes than North Dakota.

Taxes on other nicotine products would be increased from 28 percent of the wholesale purchase price to 56 percent. The national average tax on a pack of cigarettes is $1.61.

Eric Johnson, a Grand Forks physician and head of Raise It for Health North Dakota, said Measure 4 would save more than $250 million annually in health care costs related to smoking. According to the Campaign for Tobacco-Free Kids, the tax increase could result in a 20 percent drop in youth smoking statewide, preventing about 5,800 youths from becoming adult smokers.

"I support following the data. We didn't just pull this out of our ears," said Johnson, adding that the state's residents have been supportive of tobacco cessation in recent years. "This is the next big thing we should be doing."

Rep. Rick Becker, R-Bismarck, said he can't support a tax that the majority imposes on a minority of the population.

Becker also called Measure 4 a slippery slope, referring to attempts in other states to place "sin taxes" on soft drinks and fatty foods.

"I don't think it's the proper role of government. Where does it stop?" he said.

Through Measure 4, current allocations of tobacco tax dollars going to the state general fund and to cities would be held harmless.

New tax revenue created through the measure, estimated at about $100 million per biennium, would be split between health-related programs in the state's Community Health Trust Fund and a newly created Veterans Tobacco Tax Trust Fund.

Bruce Sailer, a member of the North Dakota Veterans Coordinating Council, said the funds would be overseen by boards appointed by the governor. He said veterans groups have pushed for funds for a number of needs in past sessions, but have fallen far short of meeting them; and Measure 4 would be a significant help.

"It seems like a lot of money ... but it adds up fast," Sailer said.

North Dakota Retail Association President Mike Rud said that group stands in opposition to Measure 4 and has been against past legislative attempts to raise the tax, including two bills introduced during the 2015 session.

Rud said the tax increase of about 400 percent would most negatively affect lower-income smokers. He said it would also would lead to closures and job losses among businesses that operate on slim margins, particularly those in small communities.

"It's scary to our folks," he said, pointing out it would also be taking revenue away from the state's coffers during a tough budget situation.

Rud also addressed recent media reports that the tobacco industry has already put about $800,000 into defeating Measure 4. While retailers don't endorse smoking, particularly among youth, he said it's a legal product and he's glad the industry is protecting its interests.

"Wouldn't you want to get involved and save your bacon as well?" he asked.

The increase would bring North Dakota in line with surrounding states in the tax per pack of cigarettes, according to Johnson. The tax in Minnesota is $3 per pack; in Montana, it's $1.70; and in South Dakota it's $1.53.

He rejected the notion that there's any excessive government regulation in play with the measure.

"This isn't big government. This is the voters," Johnson said.