By Victoria Wallack
Statehouse News Service

Nevertheless, state officials still expect to raise $70 million annually in new tax revenue to help balance the budget.

While some have criticized the increase as a tax on the poor since a higher percentage of low-income people smoke, others say the tax increase could be a win-win for the state.

Staff Graphic by Catherine McKinney

It will raise revenue while encouraging folks to kick the habit.

Bureau of Health statistics say 23.8 percent of adults and 20.5 percent of high school students in Maine smoke. They burn through 92 million packs of cigarettes a year.

Each one of those packs would have to carry an $8 tax to pay for the health-care costs related to smoking, according to Dora Mills, director of the Maine Bureau of Health.

“At a couple of dollars per pack … it’s not a pay as you go,” tax, Mills said.

Her department is planning commercials that “recognize as a result of tobacco costing more, people may want to quit now,” Mills said.

The commercial doesn’t specifically mention the $1 increase or that it goes into effect Sept. 19, but tells people where to get help.

“It doesn’t say, ‘Hey the tax is going up.’ We don’t really shout that,” Mills said. Rather it alludes to the rising price of tobacco and advertises the help line, which is 1-800-207-1230.

Mills rejects the notion the state is trying to have it both ways by making more money off smokers at the same time her department is trying to get them to quit.

“It doesn’t hold water because one of the chief reasons that the state of Maine is having difficulty balancing its budget is because of health care costs,” she said. That is true of other states and the U.S. government, too.

 “If we reduced our smoking rate our health care costs should go down,” she said, and “we don’t have to be as reliant on tobacco taxes.”

Becky Smith of the Maine Coalition on Smoking or Health, whose organization was pushing for a $1.50 hike in the tax, said the $1 increase will have the most impact on young smokers because they don’t have the money to spend.

A pack of Marlboro cigarettes — a popular brand among young people — already costs $4.24 at the supermarket before the new tax.

Her organization is predicting 8,400 adults will quit and 13,800 young people will stop or never start the habit.

As for fears that it will simply send people over the border into New Hampshire to buy their cigarettes, Smith said that didn’t happen the last time the price went up. That was in 2001 when the tax increased 26 cents, to $1 a pack.

“When Massachusetts increases their tax, there’s a sales spike in New Hampshire,” but that was not the case for Maine in 2001, she said, largely because most of the state is far from the border.

New Hampshire charges 80 cents a pack in state tax.

And, while the $1-a-pack hike is considerable incentive, “With the price of gas, I don’t see people driving very far to buy cigarettes,” she said.

Jerry Stanhope of the Maine Department of Revenue said the department estimates a 12 percent drop in the sales of cigarettes, and includes in that number those who quit, cut back or get their cigarettes someplace else.

The department uses a sales and excise tax “micro-simulation model” that forecasts what is going to happen to sales if you increase the price of a product, Stanhope said. “It has behavior built into it based on national statistics.”

Even with the 12 percent sales drop, Stanhope said the forecasting model shows the tax hike will raise an additional $51.3 million in this fiscal year and just under $70 million next year when the new tax will have been in place for a full 12 months.

That’s on top of the more than $90 million cigarette sales already bring in. Then there will be additional sales tax revenue or 5 cents per pack more based on the $1 hike in the price.

“It’s a tax on a tax,” Stanhope said.

The one wild card in the mix is a petition drive being led by Stavros Mendros, a former state representative from Lewiston, who said Tuesday he believes he has the needed 50,519 signatures to put the cigarette tax on the November ballot.

If his signatures are handed into the Secretary of State’s office by Friday and validated, that would put the tax on hold until the voters decide.

“I feel we’re over the 50,000 mark,” Mendros said. He said his petition circulators have gathered signatures at more than 100 stores, largely in southern Maine.

“They’re certainly going to be hit a lot harder by this tax,” than the rest of the state, he said, because people looking to buy cigarettes near the border will go to New Hampshire.