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Missouri’s tobacco tax is still the country’s lowest, something that won’t soon change

Missouri’s tobacco tax is still the country’s lowest, something that won’t soon change

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Bistate Marlboros

Three packs of Marlboro cigarettes, purchased on Friday, Sept. 18, 2020, at Dirt Cheap, a discount retailer in West Alton, cost $18.16, including sales tax. The same brand of cigarettes, sold the same day at a MotoMart in Godfrey, cost $26.89, after a $2.40 discount. (Post-Dispatch photo illustration)

JEFFERSON CITY — In Missouri, cheap smokes reign.

The state imposes a 17-cent tax on a pack of cigarettes — the lowest in the nation — just a fraction of the $2.98 rate charged across the Mississippi River in Illinois.

Missouri’s rate likely won’t change any time soon. Voters in 2016 rejected competing ballot questions that would have raised the tobacco tax. And the two top contenders for governor — Gov. Mike Parson and Auditor Nicole Galloway — don’t appear thrilled to endorse a tax hike in the middle of an election year.

The last time Missouri raised its rate was in 1993, from 13 cents to 17 cents.

A spokesman for Parson declined to comment on whether the Republican governor would back an increase to the tobacco tax.

Parson did say late last year he would not press for a tobacco tax hike or a tax on vapor products as part of an effort to deter youth vaping.

Because of the state’s Hancock Amendment, any tax increase would require voter approval. Parson said getting the issue on the ballot likely would require a collaborative effort between tobacco companies and lawmakers.

“I would say someday, down the road, you will see the industry and the Legislature come up with some sort of an agreement on how we’re going to tackle this issue,” Parson said last year.

Parson in 2018 gave a full-throated endorsement for raising Missouri’s gasoline tax by 10 cents over four years in order to pay for road improvements.

“Unlike Governor Parson, who campaigned for a failed effort to increase taxes in 2018, Auditor Galloway has never proposed a new tax increase,” Eric Slusher, Galloway campaign spokesman, said in an email.

“She’s not proposing any new tax increases to pay for the agenda she would offer as Governor,” he said. “As you know, an increase in the tobacco tax would require a statewide vote of the people.”

While Slusher said Galloway wouldn’t propose a tax increase, he wouldn’t say whether Galloway would support a question if it were to appear on the ballot.

Across the river

On Friday, three packs of Marlboro reds at Dirt Cheap, a discount retailer in West Alton, cost $18.16 after tax.

Across the river, at a MotoMart in Godfrey, three packs of same brand of cigarettes cost $26.89 after tax and a $2.40 discount for buying three packs at once.

The price difference — almost $3 per pack — is nearly the same as the Illinois tax.

State Rep. Greg Sharpe, R-Ewing, sponsored legislation this past legislative session that would allow counties to raise tobacco taxes.

“We border Iowa and Illinois, so we have quite a bit of traffic from those people from those states buying cigarettes,” Sharpe said. “I just think all the counties should be able to do that on their own.”

Sharpe’s proposal died at the end of this year’s abbreviated legislative session without receiving a committee hearing.

He said he spoke to Steven Carroll, a lobbyist for tobacco company XCaliber International, who opposed allowing counties to increase tax rates.

“He just wanted it to be uniform across all the counties, and I agreed with him on that,” Sharpe said.

Ronald Leone, lobbyist for the Missouri Petroleum Marketers and Convenience Store Association, said his members wouldn’t be opposed to raising the state’s tobacco tax, but that backers would need to not “get greedy” in order to win the support of voters.

He said Missouri gas stations and smokers outlets have an advantage over stores in other states.

Leone said, “If we increased it, we don’t want to go so high that we dissuade consumers from higher tax border states” from driving to buy tobacco products in Missouri.

Illinois collects

In the last fiscal year, Missouri’s tobacco tax raised $96.8 million, according to the Department of Revenue.

The state funneled the money to the School Fund, the Health Initiatives Fund and the Fair Share Fund, which also aids schools.

As fewer people smoke, tobacco tax collections in Missouri are on a long-term downward trend, according to the Tax Foundation, which advocates against raising tobacco taxes in order to pay for important policy priorities.

According to the Tax Foundation, Missouri collected more than $300 million annually from a 9-cent-per-pack tax in the early 1970s. That has steadily declined. The state hasn’t collected more than $100 million a year since fiscal year 2017, according to the Department of Revenue.

But, after states raise tobacco taxes, they do experience a temporary increase in collections, data show.

Illinois last year raised its tobacco tax to $2.98 per pack from $1.98 per pack. It also slapped a tax on vapor products, something Missouri has not done.

All told, Illinois collected more than $859 million in tobacco and vapor taxes for the fiscal year that ended in June, compared with $768 million the previous year.

With roughly twice the population as Missouri, Illinois collected about $67 in tobacco and vapor taxes for every resident living there.

Missouri, by contrast, collected $16 in tobacco taxes for every person living in the state.

While Missouri tobacco tax collections are directed toward education and health initiatives, Illinois uses its collections to fund general revenue, tax compliance and administration, education, health care provider relief and long-term care provider relief, according to the Illinois Department of Revenue.

Last year, for the first time in at least five fiscal years, the state directed tobacco money to its Capital Improvement Fund — more than $255 million worth of tax money.

Cigarette smuggling from low-tax states such as Missouri is on Illinois’ radar.

“The Illinois Department of Revenue’s Bureau of Criminal Investigation actively investigates cigarette trafficking into Illinois,” said Sam Salustro, spokesman for the department. “Possession of just 10 non-Illinois-stamped cartons of cigarettes across the Illinois border may constitute a criminal misdemeanor and more than 25 cartons can be charged as a felony offense. Any violation can incur significant civil penalties as well.”

Meanwhile, one tobacco company, Cheyenne International, has given more than $116,500 to Missouri candidates this year, according to the state ethics commission.

The largest recipient has been the Uniting Missouri PAC, which supports Parson. It accepted a $50,000 contribution from Cheyenne on Aug. 17.

The company gave more than $101,000 last year, records show, with Galloway’s campaign committee accepting $1,500 in July.

Other large contributions this year included $15,000 to the House Republican Campaign Committee and $10,000 to the Missouri Senate Campaign Committee, which supports Republican Senate candidates, in July.

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