Proposed Cigarette Tax Increase to Cost SC 4,100 Private-Sector Jobs

Legislation under consideration by the South Carolina Senate would raise the cigarette tax by 700 percent and cost the state more than 4,100 jobs, according to a dynamic analysis conducted by economists at the Beacon Hill Institute at Suffolk University. The tax increase is expected to particularly hurt low-income workers employed in the retail sector of South Carolina’s economy.

If approved by the Senate, House Bill 3584 would increase the state tax on cigarettes from 7 cents to 57 cents per pack. The bill has already passed the House and would establish a new health care program that would extend taxpayer-subsidized health insurance to families earning up to 200 percent of federal poverty level (FPL). That equates to $44,100 for a family of four in a state with a median household income of $43,508 (as of 2007). In addition, the legislation would extend state-subsidized insurance to high-risk insurance pool participants who earn up to 400 percent of FPL – $88,200 for a family of four. Ironically, only $5 million of the $147 million in revenue expected from the bill would go to smoking prevention and cessation efforts.

The Beacon Hill Institute dynamic analysis demonstrates the tax increase will cost 4,114 private sector jobs and reduce disposable income in South Carolina by $214 million.