Tobacco is hardly the most popular industry these days, but even its lobbyists will come out of the shadows to argue against a tax increase.
Lobbyists for tobacco giant Philip Morris have been working the Capitol, telling lawmakers the state should spend $300 million dollars it already raises from tobacco companies and smokers each year toward its ailing health care system, instead of implementing a “massive increase” in taxes.
Oklahoma collected nearly $250 million last year in taxes on smokers, and drew another $87.5 million in its annual payment from tobacco companies, part of a settlement meant to help pay smokers’ healthcare costs.
Lawmakers are considering a plan to hike the cigarette tax again to $2.53 per pack — a $1.50 increase. A pack of cigarettes in Oklahoma currently costs about $5.71, according to the industry.
“If I were the adult consumer, I would feel a little bit aggrieved,” said David Sutton, a spokesman for Philip Morris.
“I’m already paying my fair share,” he said. “Yes, I know that the product is dangerous and addictive and causes diseases, but I choose as an adult to make the decision to use it, and I’m already paying above and beyond what I pay for comparable other types of consumer products.”
Sutton, who personally quit smoking cigarettes in favor of vapes, said he is part of the company’s media operation and doesn’t know what kind of reception his group is getting from lawmakers.
But he complained that cigarette taxes are “an easy go-to” when states need money.
More than 1 in 6 Oklahomans smoked cigarettes in 2015. While that ratio has shrunk over the past four years, the state still has one of the highest smoking rates in the country, according to the Department of Health.
Supporters of the tax say it will collect more than $180 million to shore up the Medicaid system amid a $1.3 billion state budget shortfall.
Without that cash infusion, the state’s largest insurance program, which covers low-income Oklahomans, faces a 25 percent cut and an exodus of doctors and service providers who say they cannot live with smaller reimbursements.
More than 800,000 Oklahomans — about 1 in 5 — rely on the state-managed medical insurance plan.
Smokers on Medicaid cost 3 1/2 times more than those who don’t light up, said Craig Jones, president of the state’s Hospital Association.
Members of his group coincidentally filled the Capitol on Tuesday, except they were advocating in support of the tax.
“We understand that from an economic standpoint that that certainly impacts a lower income person,” he said.
But, he noted, many of those affected are Medicaid members, as well.
The last time the state raised cigarette taxes was in 2004, Jones said.
Jim Berry, administrator and executive vice president of Northeastern Health System in Tahlequah, called smoking the “leading component” of most of the state’s health problems.
“You can tie cigarettes to heart disease, you can tie it to lung disease, obviously. It causes higher incidences of stroke,” he said.
Still, members of the hospital group say the proposed tax is getting a mixed reception.
Landon Hise, CEO of Cordell Memorial Hospital, said Rep. Todd Russ, a Republican from his Western Oklahoma community, told him he supports the tax.
But Sen. Mike Schulz, R-Altus, is reportedly opposed, he said.
Hise said a 25 percent cut to Medicaid threatens to close the town’s only nursing home, which is run by a different company and serves 50 people. If it closes, the hospital and both of its clinics would be about seven years behind.
That prospect, he said, poses a much greater threat.
“Cordell will turn into a ghost town if these businesses close,” he said. “Because a lot of new businesses, they will not come to a town if they don’t have an ER. Retirees won’t want to live in a town without an emergency room or any healthcare.”