Douglas, Racine Differ on Cigarette Tax Proceeds

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(Host) State Treasurer Jim Douglas and Lieutenant Governor Doug Racine, who will face off in next fall’s gubernatorial race, have very different ideas about how to use money from a proposed cigarette tax increase.

VPR’s Bob Kinzel reports.

(Kinzel) Douglas says he would support a 67 cent increase in the state cigarette tax as a way to reduce teen smoking but Douglas does not want to use the revenue from such an increase to fund ongoing health care programs.

Douglas, who is seeking the Republican gubernatorial nomination, says the cigarette tax is an unstable source of money. Instead of allocating these funds to a variety of existing programs, Douglas backs a plan to put the money in a special trust fund. Douglas says this fund would generate interest that could be used for ongoing state programs in the future.

A 67 cent increase in the cigarette tax would raise about $25 million. Under Douglas’ plan about a $1.5 million in interest would be available in the first year:

(Douglas) “If it brings in $25 million, I don’t know if that’s the right number but that’s what I’ve heard in the first year, then after a few years we’ll probably get $20 [million] and then it will decline over time. I’ve been around here long enough to know that government is hard to wean from spending programs and I think that a knowingly unsustainable source is not an appropriate way to go.”

Lieutenant Governor Doug Racine, who is seeking the Democratic nomination for governor, says money from the cigarette tax should be used to finance health care programs like pharmaceutical assistance for elderly Vermonters:

(Racine) “Health care is perhaps the most important issue that Vermonters talk to me about. They want to see the support for our elderly continue. What’s been suggested by Mr. Douglas would hurt Vermont’s elderly. We can use the cigarette tax revenues to help us get through again the slow time in the economy to protect older Vermonters.”

Both the House Ways and Means Committee and the Senate Finance Committee are looking at proposals to increase in the cigarette tax.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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