Panel advances cigarette tax bill

BOISE – Legislation to keep Idaho’s cigarette tax at 57 cents a pack for two more years – rather than let it drop back down to 28 cents – cleared the House Revenue and Taxation Committee Monday on a 10-8 vote.

That’s the same panel whose chairwoman vowed earlier never to consider the bill in her committee. But Rep. Dolores Crow, R-Nampa, said that once HB 386 had been introduced in the leadership-dominated House Ways and Means Committee, “I felt it was incumbent on me as the chairman (to hold the hearing), even though I detest the whole thing.”

Crow and other opponents said they don’t like the idea of raising money for the state from a tax that targets just 20 percent of the state population – cigarette smokers. Plus, she said, any tax originally enacted as temporary should end on principle.

Backers of the bill said that even at 57 cents, Idaho’s cigarette tax is the lowest among surrounding states, and well below the national average of 84 cents per pack.

“Raising the cost lowers consumption, especially amongst youth,” said Mary T. MacConnell, American Heart Association lobbyist.

Rep. Jim Clark, R-Hayden Lake, who chairs the Ways and Means Committee, pitched the bill to the tax panel Monday. “I feel good about it – I got it out,” he said after the vote.

Clark spent much of the hearing going over the complex distribution formula from the tax. Counties were worried that the portion of Idaho’s cigarette tax that goes to fund juvenile corrections at the county level would decrease under the bill, but it turned out that it actually would remain the same. Money from the extended increase would be directed into an existing reserve fund, to make it available for a water settlement or other state needs.

Clark’s main pitch for the bill focused on a southern Idaho water crisis, for which the state is planning to spend more than $20 million to buy out water rights at Bell Rapids. That money would go to bridge loans that then would be paid back with 3 percent interest. The water plan also calls for funding more than $1 million in North Idaho water projects and taking other steps to address a water shortage on the Eastern Snake Plain Aquifer that has pitted two groups of water users against each other.

“Today, we’ve got an emergency, that is obviously the lack of water,” Clark told the tax committee. Six of the panel’s members are southern Idaho farmers.

But one of those farmers, Rep. Ken Roberts, R-Donnelly, spoke out against the bill, saying, “You have these boundary and border issues with the tribes – this bill does not alleviate that problem. I was sad to see that that hole was not closed.”

Some House members wanted to make another attempt in the bill to try to impose Idaho’s state cigarette tax on Indian reservation and tribal sales, but after tribes protested, House Speaker Bruce Newcomb made sure the bill as introduced didn’t contain that.

In 2003, attempts by some House members to impose Idaho’s cigarette tax on Indian reservation sales failed four times on the House floor, including several last-minute bids in the final days of the session.

The Idaho State Tax Commission has said a tax on tribal sales likely would be impossible to enforce due to jurisdictional, treaty and constitutional issues.

Rep. Wendy Jaquet, D-Ketchum, noted that Idaho’s tribes charge their own cigarette tax on reservation sales. She said the tribes nearest to her district, the Shoshone-Bannock Tribes, have told her they’re trying to match the Idaho tax rate, though the various tribes’ rates vary.

Crow said she’s heard rumors that the Senate will try to amend the cigarette tax bill to make the rate permanent, rather than just extend it for two more years. Roberts said he hoped that if that happened, they’d also try to tack the tribal issue onto the bill – but he still voted against it.

Rep. Dell Raybould, R-Rexburg, said, “This tax does reduce smoking, especially among youth.”

According to the American Heart Association, cigarette sales in Idaho dropped 12 percent after the tax was raised, compared to sales in the two years prior to the increase.

HB 386 still needs passage in both houses and the governor’s signature to become law. Lawmakers are pushing to finish up their annual session by the end of the week.