In Gov. Dayton Surprised By $32 Million Tobacco Tax Break, CBS Minnesota's Pat Kessler reports:
The tax changes will cost the state $32 million in future taxes. Repealing the automatic cigarette tax hike will cost $26 million in taxes over next three years. Lawmakers also cut $6.2 million in taxes on e-cigarettes.
The tax breaks were passed on Sunday by Democrats and Republicans alike on the last day of the chaotic 2016 legislative session, buried in a tax bill containing hundreds of other items.
Even the Democratic Gov. Dayton says it was a surprise.
“I don’t know where it came from, I don’t know who was behind it, but it is just very, very distressing,” Dayton said.
Republican leaders who support the change say it is bad public policy to automatically raise anyone’s taxes, and they strongly deny the cigarette tax change is a tax break at all.
“We didn’t reduce the tax or give a tax cut or a tax break to anyone,” said Rep. Kurt Daudt, the GOP house speaker. “We simply removed the inflator that would automatically increase the tax over time. It’s horrible policy.”
Kessler reports that anti-smoking groups favor the inflator:
We know that keeping tobacco prices [high] is good public policy because it keeps kids from a lifetime of addiction and death and disease from smoking,” [ Anne Mason, public affairs manager for ClearWay Minnesota] said.
Higher taxes or more ailing and dying Minnesotans? Which is the horrible policy?
No surprise: the Drazkowski and Melin debate on HF700
Although many are acting as if the notion of repealing the automatic cigarette tax hike is something aliens might have dropped from a flying ashtray before jumping in hyperspace on their way to Planet Smokefilledroom, Bluestem recalls that Greg Davids' HF700 was heard in the House Tax Committee on February 18, 2015.
It's in the minutes:
Representative Davids moved that HF700 come before the committee.
HF700 Davids: Cigarette annual indexing requirement repealed.
Representative Davids moved the H0700A1 amendment. THE AMENDMENT WAS ADOPTED.
Representative Davids, Molly Moilanen of ClearWay Minnesota, Matt Schafer of the American Cancer Society, Paul Cumings of the Minnesota Department of Revenue, John Dunham of John Dunham & Associates, Brady Olson of Moorhead, Minnesota, and Steve Rush of Holiday Stations, testified on HF700, first engrossment.
Representative Davids moved that HF700, as amended, was laid over for possible inclusion in the omnibus tax bill.
We recalled the topic of the bill because we posted about an exchange during the debate, Melin to Drazkowski: education, not cheap cigarettes, lifts people out of poverty. The Uptake posted a Youtube and description here, and City Pages' Ben Johnson wrote it up in Republican Legislator Says High Cigarette Taxes Are Oppressing Trailer Park Residents.
Drazkowski was one of Davids' coauthors, along with Moorhead Democrat Ben Lien. The Senate companion bill was authored by Lyle Koenen, DFL-Clara City, with David Senjem, R-Rochester, as his more or less conservative wingman.
Here's a pdf of an April 15, 2015 Department of Revenue analysis of HF700.
Davids, Drazkowski, and Koenen all served on the Tax Conference Committee:
Description: Omnibus tax bill.
Motion for Conference Committee
House: 2015-05-04 -- Senate: 2015-05-05
Conferees and Date of Appointment
Davids; Drazkowski; Barrett; Swedzinski; Pelowski;
Senate: Skoe; Rest; Koenen; Dziedzic; Gazelka;
House: 2016-05-22 -- Senate: 2016-05-22
Other than those peculiar coincidences, Bluestem has no idea where this idea came from, who brought it to the table, and who pushed for it in conference. These things are a mystery that passeth all understanding.
The C-Store Lobbyist
Steve Rush has never given to any candidate; rather, he's given $7,890.52 over the years to the HRCC (House Republican Campaign Committee which elects House Republicans), MN Retailers Impact, and the Minnesota Chamber of Commerce Leadership Committee.
From 2004 through December 31, 2015, the MN Retailers Impact has given $89,775.00 to other PACS, political party committees and candidates. For same period, the Minnesota Chamber of Commerce Leadership Committee gave $829,094.34.
The Tobacco Lobby
Tomorrow, we'll have more about lobbying by tobacco and other interests in Part 2
Photo: Representatives Jim Nash (left) and Roz Peterson (middle) enjoy cigars during one of the many breaks during the final day of session. Cigars are taxed at a different rate from cigarettes. Photo via Nash's twitter account, May 22.
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