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Keep tobacco tax increase alive

Savannah Morning News The Georgia House’s failure to approve a tobacco tax increase, while instead agreeing to levy a new tax on hospitals, is quite frankly baffling. An increased tobacco tax would outperform the hospital tax, or ‘sick tax’ as detractors call it, in nearly every aspect. Take revenue. The hospital tax, or HB 307, would impose a 1.45 percent levy on net patient revenue. If passed by the Senate, proceeds will go to the state’s Indigent Care Trust Fund, to help offset hospitals’ cost in unpaid care. According to testimony during House Appropriations Committee deliberations, the measure will raise about $175 million. While the funds will be used to draw down federal matching dollars, the tax is expected to garner somewhat less than the $655 million in federal money the originally proposed, higher hospital tax would have meant. (This broader measure had an estimated payoff of $344.9 million in direct revenues.) The hospital tax measure sunsets in 2013. Supporting Medicaid in this way might sound like a worthy idea, but an increased tobacco tax would be better. Boosting Georgia’s tobacco tax from 37 cents to $1.37 per pack of cigarettes (and from 10 percent to 25 percent for loose tobacco) would raise somewhere between $355 million and $406 million in direct revenues, according to a state Department of Audits estimate. With federal matching, that would mean more than $1 billion for Georgia, according to estimates based on current state budget numbers. And that’s even accounting for a likely drop-off in tobacco purchases caused by the higher prices. The move would take Georgia’s cigarette tax from fifth lowest in the nation, to about the national average ‘” and keep the Peach State in step with other states in the Southeast which have, or are considering tobacco tax increases. What’s more, hospital administrators note that while lawmakers have expressed their good intentions of returning the hospital tax dollars to the hospitals, there is no guarantee when those payments might occur, or at what frequency. Rural and metropolitan hospital systems alike are hanging on by their fingernails. An added cost with dubious payoff could mean the end of expensive health services, or the closure of some small hospitals. Also, while the hospital tax might help the health providers address their unpaid care, the tax would be one more expense on paying customers ‘” patients who are in the hospital because they’re sick, not because they choose to be. By contrast, the tobacco tax would hit only those who choose to smoke; it could keep some young people from starting; and might make it easier for current smokers to kick the deadly habit. This aspect of the tobacco tax would save lives and save state Medicaid a whopping $537 million a year in treating tobacco-related illnesses. The tobacco tax, or House Bill 39, sponsored by Rep. Ron Stephens, R-Savannah, would mean more in direct revenues, more in federal dollars, more in savings and better health for Georgians. Day 30 of this legislative session ‘” the deadline by which one house must pass a bill for it to become law in a given year ‘” has passed. But there still might be time for the General Assembly to act. We encourage Senators to amend any House-passed tax bill to include the provisions of HB39, and get this win-win legislation on the law books this year. We hope the state Senate will pull the plug on the hospital tax.

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