Supporters of a measure that would sharply raise the state’s tobacco tax say, if approved, public health costs would be reduced and fewer young people would be drawn into taking up the habit.
Opponents counter that the measure places an unfair tax burden on a portion of the state’s population with lower income, adding that the measure lacks a specific spending plan for the tens of millions it would produce in new revenue.
If approved, Measure 4 would increase the tobacco tax for cigarettes in North Dakota from 44 cents per pack to $2.20 and 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, says Measure 4 would have 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, preventing about 5,800 youths from becoming adult smokers.
“It makes medical sense that we do this,” Johnson said.
The coalition has raised more than $10,600 for its efforts, according to campaign finance reports.
Lawmakers have rebuffed multiple attempts to raise the tax over the years, which is why doing so through the ballot box is the way to go, Johnson said.
Through Measure 4, current allocations of tobacco tax dollars going to the state general fund and to cities would be held harmless.
A fiscal note released last month to lawmakers estimates the fiscal year 2017 impact if Measure 4 passes at $28.7 million in additional revenue. For the 2017-19 biennium, total revenues collected would be $141.7 million.
New tax revenues created through the measure would be split between health-related programs in the state’s Community Health Trust Fund as well as a newly created Veterans Tobacco Tax Trust Fund.
Bruce Sailer, a veteran and member of the North Dakota Veterans Coordinating Council, said the funds would be controlled by boards appointed by the governor so there is proper oversight of dollars.
The increase would bring North Dakota in line with the 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.
North Dakota Retail Association President Mike Rud said the group he leads is in opposition and has been against legislative attempts in the past to raise the tax, including two bills in the 2015 session.
The about 400 percent tax increase would most negatively impact lower-income smokers, according to Rud.
“Why are we going to tax the least wealthy portion of the population?” asked Rud, who said it would also impact businesses, particularly those in small communities, that operate on slim margins and would cause closures and job losses.
He said Measure 4 isn’t the way to reduce smoking.
Industry groups, including the tobacco industry, have put more than $3.4 million into defeating Measure 4. While retailers don’t endorse smoking, particularly among youth, Rud said it’s a legal product and he’s glad they’re getting involved in protecting their interests.
“How the money’s going to be spent is our biggest concern. That’s just not the North Dakota way," said Rud, indicating the ballot measure route is the wrong way to go about making changes in tobacco taxes.
While there’s statewide support for veterans, Rud said Measure 4 isn’t the way to meet their needs.
“If we need to fund the veterans, then we should all foot the bill,” Rud said.