SC Statehouse Report April 5th

April 5, 2009

 

Using Tax Credits to Help Provide Health Insurance

 

 

This week, the South Carolina House raised the tax on a pack of cigarettes.  I do not support raising taxes especially in this down economy, so I did not vote for the tax increase personally.  However, it is my responsibility to let you know what is happening in our SC state government so here is the breakdown. 

South Carolina has the lowest cigarette tax in the nation – a fact you have probably read many times over the past few years.   

Our state’s current cigarette tax stands at 7 cents a pack.  The increase the House approved this week will raise an estimated $147 million in revenue.  Almost all of that money will be used to create a trust fund to help small businesses provide health insurance to their employees, and help low-income families purchase health insurance for their families.

 

The House voted to raise the cigarette tax in 2007, and appropriated the money to eliminate the sales tax on food.   That plan was later changed to fund a major expansion of Medicaid.  Conservatives were able to sustain the veto and kill the cigarette tax increase.  Later in 2007 we were able to eliminate the grocery tax anyway – part of a major package of tax cuts that included slashing half of your property tax and lowering the state income tax.

 

Under the House plan, small businesses with up to 25 low-income workers will be eligible for a 67 percent credit on insurance premiums for each worker.  Only U.S. Citizens are eligible for the program, and only a certain number of spots are available.

 

Individuals may also purchase health insurance, and receive a tax credit of up to $3,000 if they make less than $21,500 a year. 

 

If the bill is approved by the Senate and signed by the governor, the first policies could be issued in 2011, which will allow the trust fund to build up adequate reserves to fund the program.

 

The tax credits are a market-based solution to the real health-care challenges we face right now.  Small business owners are the backbone of our economy and our community.  Many of them want to provide health insurance to their employees, but many small businesses operate on thin margins, so the incredible expense of insurance is cost-prohibitive.  The House plan is to use the cigarette tax to provide tax credits to these responsible small business owners.

 

I hope you and your family have a wonderful and blessed  Easter.  The House will not be in session for the next two weeks, saving taxpayers more than $100,000.  When we return, we will have only four more weeks of work for 2009.

As always, thank you for the privilege of serving you in Columbia.  If I can ever be of assistance to you, or if you have ideas on issues you want me to share with the rest of the General Assembly, please don’t hesitate to contact me at 864-230-7044.

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