Missourians defeat cigarette tax for third time in a decade
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Missourians defeat cigarette tax for third time in a decade

Date: November 7, 2012
By: Wes Duplantier
State Capitol Bureau

JEFFERSON CITY -- For the third time in a decade, Missouri voters have voted down an increase in the state's tobacco tax, opting to instead keep the nation's lowest state cigarette tax rate at 17 cents per pack of cigarettes.

By a margin of 51-49, Missourians voted Tuesday to reject Proposition B, a proposal to increase the tobacco tax to about 90 cents per pack. Similar proposed tax hikes were defeated in 2002 and 2006.

"We're obviously thrilled and grateful but not surprised by the result," said Ron Leone, the executive director of the Missouri Petroleum Marketing and Convenience Store Association, noting the past defeats of similar measures.

The measure had been expected to generate as much as $423 million in additional state tax revenue each year. That money would have been divided three ways: 50 percent to elementary and secondary education, 30 percent to public higher education and 20 percent to fund programs aimed at preventing people from using tobacco products.

But those extra funds would have come from the pockets of the estimated 25 percent of Missourians who smoke. And the businesses who sell to those smokers — gas stations and convenience stores — led the charge against Proposition B.

Gas stations around the state used signs displaying their prices to plead with voters to reject the tax, which they saw as a direct threat to their bottom line.

"The one thing (the pro-Prop B groups) couldn't replicate or buy was our ground game," Leone said.

A key difference in this year’s campaign from years past was the lack of opposition from manufacturers of widely-known cigarette brands, known colloquially as "Big Tobacco." That left the pro-tax side better funded than the opponents.

Those large tobacco companies took their voices — and campaign dollars — out of the fight because of a provision in Proposition B that changes the amount of tax revenue lesser-known cigarette brands have to pay to the state.

All cigarette brands have had to send tax revenue to the state. But under previous law, lesser-known cigarette brands that were not part of the state’s settlement with tobacco companies in the late 1990s were given back the tax revenue that they had paid. That refund enables the smaller brands to charge a lower price for their cigarettes than the big brands and still make a substantial profit. Proposition B would have closed that refund loophole, cutting into the price advantage of smaller-brand cigarettes.

According to the Campaign for Tobacco-Free Kids, Missouri is one of only three states that has not raised the tax on cigarettes since 1999. The other two are North Dakota and California. Missouri's tax rate is 13 cents less than Virginia, which has the second lowest tax, and is $1.46 under the national average. The state tax rate is a mere 3.9 percent of New York's whopping $4.35 state tax.

Democratic Gov. Jay Nixon had not taken a stand on the measure in the weeks leading up to the vote. One point of Nixon’s successful re-election campaign had been an emphasis on his reluctance to raise taxes.

The group "Show-Me A Brighter Future" proposed the ballot measure and organized a bus tour devoted to spreading the message about the dangers of tobacco, and the benefits to be gained from voting yes on Proposition B.

Democratic lawmakers have been among the most prominent voices in supporting a cigarette tax increase throughout all three efforts. State Rep. Chris Kelly, D-Columbia, gave $10,000 to a campaign in favor of the measure and participated in a forum on the University of Missouri campus in Columbia where he outlined the benefits of the tax.

Democrats met at The Blue Note restaurant in Columbia to watch the state’s voting returns roll in Tuesday night.

Walking out of the watch party in Columbia with about half of the state's precincts counted Tuesday night, Kelly said he was disappointed that the measure was trailing. But he said that Democratic state legislators likely wouldn't attempt to raise the cigarette tax legislatively.

"It's a pretty clear message," he said before leaving the party.

Missouri's other ballot issues

In addition to rejecting an increase to the state's cigarette tax, Missourians approved two other proposals Tuesday night.

Voters approved Proposition A, which grants St. Louis local control of its police force for the first time since the civil war. Missourians also approved Proposition E, which restricts the governor from implementing a health care exchange in the state without a vote of the people or legislative approval. With 92 percent of precincts reporting, Proposition A was approved by a 64-36 margin while Proposition E passed by a margin of 62-38.

Missourians also rejected a proposed constitutional amendment that would have changed the selection process for appellate judges. Constitutional Amendment 3 failed by a margin of 76-24 with 92 precincts reporting. The amendment would have given the governor more control over the selection of state Supreme and Appeals Court judges. It also would have changed the composition of the seven-member panel responsible for interviewing and selecting judicial candidates to submit to the governor to fill a court vacancy.