Clearing the air on the cigarette tax
The headlines from this legislative session are hard to miss. Oklahoma is facing another budget shortfall – $878 million to be exact.
While ideas are being floated on how to remedy this problem, we are faced with a stark reality: Our state can’t continue to operate without money. While the energy industry is on the rebound, we shouldn’t discourage investment in this vital industry by increasing their tax burden. Likewise, taxes on the service industry will severely cripple Oklahoma businesses. However, we must find a way to supplement our state’s income.
Over the past few years, Oklahoma has debated a tax on cigarettes and each year, it fails at the Legislature. Partisan bickering and automatic aversion to the word “tax” keep our state from receiving the critical funds it needs. The business community is frustrated. Oklahoma deserves better and government must be funded adequately to provide core services like health care.
The cigarette tax is a good business decision. A $1.50 cigarette tax will raise approximately $180 million to help shore up the budget hole and provide stability for Oklahoma’s economy. Smoking is a major driver of health care costs for businesses. Every year, Oklahoma spends $1.62 billion on health care costs and businesses pay a substantial portion of this expense. The cigarette tax will also help reduce health insurance costs at a time when premiums are on the rise.
Hospitals are another important factor to consider. The health care industry is a major economic driver in Oklahoma, employing more than 71,000 citizens, and is an important contributor to our social safety net. Yet hospitals face the largest of all unfunded government mandates. Hospitals must serve every person who walks through their door, regardless if they can pay. While this is a good social policy goal, there are financial consequences. The cigarette tax will help stabilize our health care industry and keep hospitals open.
There is a clear business case for the cigarette tax. Businesses must base their decisions on the facts, not politics or ideology. The facts are clear: Smoking adversely affects the health of our state and costs every Oklahoman through higher health care costs. Oklahomans overwhelmingly agree on the need for the tax, with 74 percent supporting the increase, and lawmakers need to act. It’s time to stop the hyper-partisan nature of this discussion and do what’s best for our state.
Column by Fred Morgan, President and CEO of the State Chamber of Oklahoma, printed in The Journal Record on April 14, 2017