Currently, North Dakota tobacco users pay 44 cents in tax for every pack of 20 cigarettes. According to the legislative website Ballotpedia, that’s the fourth lowest per pack tax rate in the country.
Under the North Dakota Tobacco Tax Increase Initiative, also known as Measure 4, that tax would increase to $2.20 per pack. The growth is $1.76, or four times the current per pack tax. Along with that, the tax on all other tobacco products, including liquid nicotine and electronic inhalation devices, would increase from 28 percent of their wholesale purchase price to 56 percent.
Measure 4, which will be voted on during the Tuesday, Nov. 8 general election, was initiated with the intent to create two funds from the tax revenues.
Half of the revenue would go to a veterans’ tobacco trust fund, where it will be used for programs of benefit and service to veterans or their dependents,” according to the petition presented to the Secretary of State.
If Measure 4 passes and the fund is established, the money would be appropriated to the administrative committee on veterans’ affairs to be spent “on programs consistent with a strategic plan as developed and approved by the administrative committee on veterans’ affairs.”
The second half of the revenue would go to a community health trust fund, where it would be proportionately split. According to the website raiseitforhealthnd.com, 70 percent of money in the fund would go to a behavioral health comprehensive plan as determined by a council appointed by the governor.
Raise It For Health also says 20 percent of funds would be dedicated to North Dakota counties, based on their populations, “for essential local health unit services as established by the state health council.” Finally, 10 percent of the funds would be dedicated to the Department of Health for support of chronic disease detection, prevention, treatment and control.
According to Raise It For Health, the new tax revenue would not go towards tobacco prevention and cessation programs. That information contradicts a point made by state Rep. Craig Headland, R-District 29, in a recent letter he sent out against Measure 4.
At the same time, Raise It For Health does acknowledge Measure 4’s potential to cause tobacco prevention and cessation.
“Tobacco tax increases are proven to be one of the most effective policies to prevent kids from using tobacco,” they state. “Measure 4 is estimated to decrease youth initiation rates by 20 percent and prevent 5,800 N.D. youth under the age of 18 from ever starting. Tobacco tax increases also encourage current tobacco uses to quit … Measure 4 is estimated to lead 6,600 current adult smokers to quit.”
Both Headland and Raise It For Health agree that North Dakota already has a fully funded tobacco prevention and cessation program.
“North Dakota already ranks No. 1 in the country for allocating funding to tobacco prevention,” Headland wrote. “We currently spent $9.5 million per year. As a legislator I think this is very important, as it is our job to balance being No. 1 in one area with other pressing needs like roads, schools and crime … none which is addressed in Measure 4. What’s also important to know is that North Dakota’s Tobacco Prevention and Control Committee has a $55 million surplus available to spend on anti-tobacco programs moving forward in the years ahead.”
Describing Measure 4 as an attempt by interest groups to “usurp the legislature,” Headland explained that the proposed tax increase had been rejected by North Dakota’s Legislative Assembly during its last session.
Both Headland and the group North Dakotans Against the 400 Percent Tax Increase argue that Measure 4 is poorly written.
“(It) is nine pages of fine print with exemptions, mandates and dozens of complicated changes to North Dakota law,” North Dakotans Against wrote. “Only four sentences describe what types of programs the funds could be used for and with no accountability to taxpayers. It allows 45 political appointees to direct millions of dollars in spending. It’s really a blank check for bureaucrats and political insiders to spend the new tax money on whomever they want.”
Headland and North Dakotans Against are also concerned about Measure 4 being a locked in part of the North Dakota Constitution for at least seven years.
“As a result, it is extremely difficult for the legislature to change it, except by a two-thirds vote, even in cases of waste,” Headland wrote. “If it was legislation, we could address any problems much more readily. The idea of $70 million (a revenue figure estimated by Tax Commissioner Ryan Rauschenberger) per year locked-in for seven years is not the way we should be running the state or managing our tax dollars.”
Along with that, North Dakotans Against argues against Measure 4 on the grounds that the new tax revenue is not prohibited from being spent on out-of-state vendors and consultants.
“If we’re going to raise $70 million in new taxes on North Dakotans, the money should be spent here,” they wrote.
According to Ballotpedia, North Dakotans Against has raised over $3.6 million from donors such as Altria Client Services, the parent company of Philip Morris USA, which has contributed over $2.5 million. Another large donor is the R.J. Reynolds Tobacco Company, which has contributed nearly $950,000 to date.
Ballotpedia also states North Dakota’s current per pack cigarette tax of 44 cents is the fourth lowest in America. As of September, Minnesota tobacco users pay a $3 per pack tax, while South Dakota tobacco users pay a $1.53 per pack tax.
Missouri, the state with the lowest per pack cigarette tax, 17 cents, has two measures on its ballot. One calls for an increase in the tax to 23 cents, while the other calls for an increase to 60 cents.
As election day nears, the News-Monitor will continue providing articles explaining each measure on the North Dakota ballot. The full text of each measure is available on the Secretary of State’s website at vote.nd.gov or by requesting a copy from the Elections Division, Secretary of State’s office at 800-352-0867, ext. 328-4146 or from the office of any county auditor.