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Published November 14 2010

Group to fight a cigarette tax hike in North Dakota

A newly formed group that intends to fight tax increases during North Dakota’s 2011 legislative session has set its sights on a proposal to raise the cigarette tax to $2 per pack.

The North Dakota Consumer and Business Network put petitions in convenience stores across the state about two weeks ago and already has collected “a couple thousand” signatures, said Mike Rud, president of the state Petroleum Marketers Association.

Fargo-based Stop-N-Go Food Stores is among those carrying the petition. Stop-N-Go management referred questions to Rud.

Rud said the network formed about two months ago and held its first meeting in early October.

Its main goal is “to avoid any attempt to increase taxes on North Dakota businesses, consumers and taxpayers and allow the free market economy to grow and flourish here in North Dakota,” Rud said.

“We’re definitely the envy of the nation, and I don’t think we want to change that,” he said.

In addition to the Petroleum Marketers Association, network members include the North Dakota Taxpayers Association, Hospitality Association, Grocer’s Association, Coin and Tavern Association, Policy Council and wholesale distributors, Rud said.

The petition targets a proposal by the Fargo-based Smoke-free Air for Everyone (SAFE) Coalition, which wants the Legislature to raise the excise tax on cigarettes from 44 cents to $2 per pack by 2013 or sooner. The coalition seeks equivalent tax hikes on cigars, chew and other tobacco products.

Jay Taylor, a coalition member and respiratory therapist at Sanford Medical Center in Fargo, said the coalition hasn’t found a lawmaker to sponsor a bill to raise the taxes.

“I can say there’s interest,” he said.

The petition points out that North Dakota already enjoys a budget surplus and ranks highly for funding tobacco cessation programs, and that “tax policy should not be used to force changes in human behavior.”

Petition supporter Bobbi Bengson, a 30-year-old smoker from Fargo, said raising the cigarette tax to $2 per pack would basically force her to quit – a decision that should be up to her, not the state, she said.

“The state of North Dakota does not need the tax revenue. We have a billion-dollar surplus sitting there doing nothing,” she said.

North Dakota smokers pay a state cigarette excise tax of 44 cents on a package of 20 cigarettes, or $4.40 on a 10-pack carton.

“To move that to $2 a pack is going to have a devastating impact on sales for our retailers, so we’re definitely concerned about that,” Rud said.

Minnesota’s tax is more than three times as high, at nearly $1.58 per pack, prompting many smokers to cross the Red River into North Dakota to buy their cigarettes. The national average is $1.45 per pack.

North Dakota currently has the 46th lowest cigarette tax in the nation and is one of three states that haven’t raised their cigarette taxes since 1999, according to the Campaign for Tobacco-Free Kids. North Dakota’s tax was last increased in 1993, from 29 cents to 44 cents per pack.

Chewing tobacco in North Dakota is taxed at 16 cents per ounce and snuff at 60 cents per ounce. Pipe tobacco and cigars are taxed at 28 percent of the wholesale purchase price.

Last year, the state took in nearly $23.9 million in revenue from cigarette and tobacco taxes, according to figures from the state Tax Commissioner’s office.

Smokers account for the bulk of the money: Cigarette tax revenue accounted for 84 percent, or $20.1 million, of 2009’s total.

Rud said the state’s tobacco cessation efforts are adequately funded and don’t need the additional revenue of a $2-per-pack tax, which the petition warns will impose $34 million in new taxes.

Taylor referred to state Health Department figures that claim the state collects less than $22 million annually from cigarette taxes but pays out $442 million in direct medical and lost productivity expenditures related to smoking.

“The tax is not to make money,” Taylor said. “The tax is to make cigarettes a little too expensive for kids, and according to CDC guidelines, this works.”

At the current price for a pack of Marlboros at Stop-N-Go, a $2 excise tax would raise the cost from $5.03 to $6.59 per pack.

Rud said the Consumer and Business Network is confident the incoming Legislature, with its Republican majority strengthened by the Nov. 2 election, will be “very business conscious.”

“We’re not anticipating a real battle in terms of a tax increase, from that standpoint,” he said.

Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528