Debating Minnesota's Cigarette Tax

If a plan by Gov. Tim Pawlenty's tax commission is followed by the Minnesota Legislature, it would impact everyone, taxing computers for schools, used motor oil and clothes. But the biggest tax would be on cigarettes -- an action President Obama has already taken, starting today.

Ranging from $4 to $6, smokers feel a sharper pinch during these tough economic times.

"What's fair is fair, I guess," smoker Justin Beloy said. "What are you going to do?”

Wednesday, the governor's tax commission introduced changes to the system, favoring a repeal of corporate taxes, while raising the tax on cigarettes by a dollar per pack. They say the cigarette tax would raise $145 million each year and help save on the estimated $2 billion per year in cigarette-related health care costs.

"This is really about health care, and really about keeping a society healthy," Mike Vekich, a member of the tax commission, said.

The commission also supports widely expanding the state sales tax to include everything from clothing and baby products to car repairs and even caskets and burial vaults.

But back to cigarettes -- President Obama recently expanded the State Children's Health Insurance Program (SCHIP). Starting Wednesday, it's funded by a tobacco tax hike of 62 cents. If you add in the proposed hike of one dollar in Minnesota, the price of cigarettes would be about $7 per pack.

"I'm not sure piling on even more on smokers is a good thing to do from a revenue generating perspective," Rep Paul Kohls (R-Victoria) said.

With costs on the rise, the real question is, will smokers quit?

According to tax committee chair Ann Lincheski, implementing these tax changes, including the cigarette tax, would require a lot of political will and support from Gov. Pawlenty.

Lincheski says, so far, Pawlenty has not shown any willingness to get behind these changes.