Schaefer tries to save tax bill

February 12, 1994|By Robert Timberg | Robert Timberg,Sun Staff Writer

Gov. William Donald Schaefer carried his campaign for a cigarette tax increase to a key legislative panel yesterday in an effort to breathe life into an initiative gasping for air.

The governor said that his proposed 25-cents-a-pack tax boost would greatly reduce cigarette smoking, thus curtailing health risks, while providing $70 million for a variety of popular programs.

If the increase is enacted, Maryland's tax would jump to 61 cents, giving the state the second highest levy in the nation, trailing only the 65 cents imposed by the District of Columbia.

"I'm worried about cancer," Mr. Schaefer told the Senate's Budget and Taxation Committee in a rare appearance at a legislative hearing. "My first objective is health, the second is the money."

Even before Mr. Schaefer appeared before the committee, however, its chairman said the governor's tax proposal, as drafted, was dead. "There really is no chance that the bill will pass as presented," said Montgomery County Democratic Sen. Laurence Levitan.

After the hearing, Mr. Levitan said that the spending of the tax revenue proposed by the governor would exceed the legislature's self-imposed, though nonbinding, limit on increases in state spending from one year to the next.

That limit, established a decade ago, is tied to the annual percentage increase in personal income, adjusted to compensate for prevailing economic trends.

Mr. Levitan said it was possible, if unlikely, that the legislature might pass a cigarette tax increase as a health measure but without dedicating the revenues, as Mr. Schaefer wants. Instead, he said, the money could be put in a reserve fund that the state could use for contingencies and would not be included when affordability limits are determined.

The tax increase would generate about $70 million. The governor has proposed sending $50 million of that to Baltimore and the 23 counties to help pay for programs mandated by the state for schools, health, public safety and the environment.

Another $13 million would be used to expand a program for the developmentally disabled approved by the legislature last year. The remaining $7 million would pay for a school for disruptive students and to broaden programs for the poor and homeless.

Mr. Schaefer was backed by anti-smoking advocates, including the American Cancer Society's Eric Gally, who came with poll results asserting that more than half the state's voters favor the tax increase.

The statewide telephone survey of 817 registered voters, completed 10 days ago by Mason-Dixon Political/Media Research, says 61 percent of respondents support the tax, 31 percent oppose it, with 8 percent undecided.

Tobacco lobbyist Bruce C. Bereano, sporting a red, white and blue button that read "Tobacco Tax = Lost Jobs," warned the legislators that the proposed increase could be hazardous to their political health.

"This is a tax, and a tax is a tax is a tax," said Mr. Bereano. "And this is an election year."

He insisted that the tax discriminates against and economically abuses smokers, who have seen the tax on a pack of cigarettes increased three times since 1991, when the rate was 13 cents.

As for Mr. Bereano's contention that a tax increase would mean a loss of jobs, state Health Secretary Nelson J. Sabatini, a reformed smoker, said, "Maybe some of the jobs that will be lost will be oncologists and the people who remove lungs."

Mr. Schaefer has urged Baltimore Mayor Kurt L. Schmoke and top county officials to throw their weight behind the tax, which could mean millions to their localities.

Of those who agreed to do so, only Montgomery County Executive Neal Potter appeared at the hearing. Mayor Schmoke and the others were dealing with yesterday's immobilizing snow and ice storm.

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