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Published: Saturday, 5/21/2005

Smokers, not drinkers, to feel tax hit; proposal targets tobacco to keep beer-related jobs

BY JIM PROVANCE
BLADE COLUMBUS BUREAU

COLUMBUS Ohio Senate Republicans will choose brewery jobs over tobacco farmers Tuesday when they propose substituting an even higher cigarette tax for Gov. Bob Taft s proposed doubling of beer and wine taxes.

The decision to raise one sin tax over another was more an economic issue than a consumer one. Senate President Bill Harris (R., Ashland) cited the 1,500 jobs that the beer industry claimed could be lost if the nonliquor alcohol tax increase were enacted as approved by the House.

The Senate also plans to reverse proposed tax hikes on other tobacco products such as cigars and chewing tobacco as well as on real-estate transfers.

The beer industry claims 35,000 related jobs in Ohio, including Anheuser-Busch s brewery near Columbus and Miller s near Cincinnati.

We are sensitive to the fact that there could be a large number of jobs lost, said Mr. Harris. It s not the objective of tax reform to lose jobs in Ohio.

The proposed increase would have raised the beer tax to 36 cents. The budget had counted on collecting $51 million more a year from the higher beer and wine taxes.

The additional quarter on a pack of cigarettes would raise a total of $257 million over the biennium. It would be part of a tax reform package that also includes a 21 percent reduction in personal income taxes over the next five years and a reworking of business taxes.

Senate Republicans intend to add the 25 cents to the 45-cent cigarette tax hike proposed by the governor and passed by the House, ultimately raising Ohio s tax to $1.25 per pack. Mr. Harris and Senate Finance Chairman John Carey (R., Wellston) said Republicans, who outnumber Democrats in the Senate 22-11, will increase funding for children s hospitals by $12 million over the next two years. The current budget would freeze state support.

We re not asking for something new, said Andy Carter, president of the Ohio Children s Hospital Association. We re just trying to stay on track. We already operate at a loss with Medicaid, and the governor s budget just made a bad situation worse.

The majority GOP plans to unveil its $51.3 billion, two-year budget counter-proposal Tuesday in anticipation of a full Senate vote by June 1. Mr. Harris said talks continue on other aspects of the budget, including Medicaid reforms.

As of now, the plan retains the 30 percent increase in the kilowatt-hour tax.

The governor stands behind his proposal in reforming Ohio s tax code, but we ll continue to work with the Senate, said Taft spokesman Mark Rickel. A budget must be enacted by July 1.

Anti-tobacco activists and health-care organizations have pushed for a cigarette tax hike of 75 cents per pack, a nickel more than the Senate GOP proposes and 30 cents more than the Taft-House plan.

But the plan would have earmarked the money to repay $352 million in tobacco settlement money borrowed from smoking prevention, treatment, and cessation efforts, and to finance expanded health-care programs.

The Senate plan, however, would use the additional money to fund existing programs. It would also proceed with the House s plan to divert millions of dollars more from the tobacco settlement fund over the next two years to subsidize emission-testing fees for motorists, help finance a program urging Ohioans to adopt healthier lifestyles, fill a hole in the general fund, and finance the state s expansion of managed care for Medicaid.

We appreciate the increase in the tobacco tax because we know that ll help current smokers to quit, especially teens because they re very price sensitive, said Stu Kerr, northwest regional coordinator for Tobacco-Free Ohio. But they continue to siphon off foundation funding for cessation programs.

Contact Jim Provance at:jprovance@theblade.comor 614-221-0496.



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