Senate may vote on cigarette fee today

04/19/2006

Proposal replaces it with 75-cent tax

BY PATRICK SWEENEY
Pioneer Press

Minnesota state senators may vote as early as today on a proposal to replace the state’s 75-cents-a-pack fee on cigarettes with a nearly identical tax.

Sen. Sheila Kiscaden, DFL-Rochester, one of more than 20 legislators — senators and representatives, Democrats and Republicans — who last week signed on as co-sponsors of bills to turn the fee into a tax, said Tuesday she would offer the proposal as an amendment to a Senate tax bill today.

In December, a Ramsey County District Court judge ruled the “health impact fee” on cigarettes illegally conflicts with a 1998 court settlement. But the judge said the 75-cent charge, which went into effect in August, would have been legal if it were enacted as an increase in the existing 48-cent excise tax on cigarettes.

The Minnesota Supreme Court is considering an appeal of the ruling. If the court agrees the fee is illegal, Minnesota stands to lose about $185 million a year in revenue.

Kiscaden and other co-sponsors of the bills to turn the fee into a tax said they wanted to maintain a reduction in smoking — particularly among teenagers — that the fee helped produce. When the fee was enacted last summer, the state Revenue Department predicted it would cut smoking by 14 percent.

But the tax proposal faces significant opposition in both the House and Senate and from Gov. Tim Pawlenty.

“The governor does not support repassing the health impact fee as a tax,” said Brian McClung, a spokesman for the governor. Pawlenty signed a campaign promise in 2002 to veto any tax increase.