SC House votes to keep cigarette tax hike in spending plan

COLUMBIA -- South Carolina lawmakers are a step closer to increasing the state's cigarette tax for the first time in more than 30 years.

House lawmakers voted to keep a 30-cent per pack increase in a $5.1 billion state spending plan.

The state could not tap the money -- an estimated $90 million -- until July 1, 2011. It would have to be spent on health care. Supporters said the tax increase would help defray budget cuts when more than $1 billion in federal budget aid runs out.

"The tax . . . would allow the state to take care of some of our health care needs next year when that freight train comes barreling at us," said House Minority Leader Harry Ott, D-Calhoun.

However, House lawmakers rejected larger increases, including a 50-cent increase they approved last year. That money would have provided subsidies for private employers or low-income workers to purchase health insurance.

Some lawmakers said a larger tax increase would put S.C. businesses at a disadvantage with competitors in North Carolina and Georgia.

Others opposed the tax increase completely and did not have an issue that the fact that South Carolina, at 7 cents a pack, has the lowest cigarette tax in the nation.

"I want to be the lowest taxes on everything," said Rep. Joey Millwood, R-Spartanburg, who warned lawmakers who signed a no-tax pledge that they would violate it with a vote for the budget. Millwood's amendment to remove the tax failed by a 106-12 vote.

The House also voted to keep a $15 million loan in the budget designed to entice low-cost air carriers to the state. S.C. airports tend to have higher fares than others, and lawmakers said more competition would lower airfares and make the state more attractive to business.

A number of low-cost carriers have expanded in the state only to eventually cut flights or pull out of entirely.