James MacPherson, Associated Press, Published January 29 2013
ND measure would bump tax for pack of cigarettes
Tax analysts estimate the measure could swell North Dakota's treasury by about $30 million annually, but Rep. Eliot Glassheim told the House Finance and Taxation Committee on Tuesday that's not his aim.
“The purpose of this bill is not to raise money,” Glassheim said. “It is to give an extra incentive to help people quit smoking.”
Anti-smoking groups testified Tuesday that Glassheim's bill doesn't go far enough and pushed for tax increases of up to $2 for a pack of cigarettes. The groups estimate that about 20 percent of adults in North Dakota smoke cigarettes, and about 800 people die annually in the state from smoking-related diseases.
The Grand Forks Democrat said he quit smoking when the cost of a pack rose by a dime decades ago.
“I'll never forget how angry I was at myself for being controlled by a powerful force,” Glassheim said. “It was only when I calculated how much I was spending a year on cigarettes and what I couldn't buy because of smoking that I was able to quit.”
State and federal data show North Dakota ranks 46th among states in the amount of tax smokers pay. New York charges the most state excise tax in the nation at $4.35.
North Dakota Chamber of Commerce spokesman Bill Shalhoob said his group is opposed to raising excise taxes of any kind, especially for what he called “social engineering.”
“This code is a very poor way to do that,” he said.
Jeanne Prom, director of the North Dakota Center for Tobacco Prevention and Control Policy, said the state has not raised its tax on cigarettes since 1993.
“The low tax results in inexpensive tobacco that is affordable to you and populations with limited incomes and high smoking rates,” Prom said.
North Dakota, North Carolina and South Carolina are the only states that do not require a tax stamp on a pack of cigarettes, said Steve Grimaldi, director of security for Reynolds American Inc., which owns the nation's second-biggest tobacco company, R.J. Reynolds Tobacco Co.
“The lack of a tax stamp combined with the relatively low price of cigarettes ... makes North Dakota a target state for those individuals and organizations engaged in trafficking black market cigarettes,” Grimaldi told lawmakers.
He said his company estimates that as much as a third of the cigarettes sold in North Dakota, about 17 million packs a year, “are likely being exported to other states.”
Several North Dakota cigarette distributors opposed a second measure to place tax stamps on cigarettes.
John Job, a spokesman for a Bismarck-based cigarette distributor, said the machinery and training necessary to place tax stamps on cigarette is expensive for companies.
“Without any way to recoup our costs, I view it as a tax on our industry,” he told the committee, which took no action on the proposed legislation.
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