Pennsylvania Governor Proposes Cigarette Tax Increase

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Pennsylvania Governor Proposes Cigarette Tax Increase

HARRISBURG, Pa. -- Pennsylvania's governor has proposed raising the cigarette tax by 25 cents per pack to help doctors pay medical malpractice insurance premiums that are owed to a state-operated fund by Jan. 1, according to an Associated Press report.

Rosemarie Greco, Gov. Ed Rendell's director of the state Office of Health Care Reform, said that the 25-cent-per-pack boost would raise $181 million annually to pay the state-operated backup malpractice insurer, called MCare, the Associated Press reported.

The state currently taxes cigarettes at a $1-per-pack rate after the state raised the levy by 69 cents last year to help pay for a budget shortfall. The proposed increase in the cigarette tax would be buttressed by about $44 million that is being transferred to the MCare fund annually for a decade, money that comes from a surplus in an automobile insurance fund, Greco said.

Payments to the fund are due in seven weeks. Rendell first proposed a three-year partial subsidy for doctors' MCare premiums in June, but his administration took until this week to finalize a proposal to pay for it, the Associated Press reported.

The administration briefed legislative leaders earlier this week on the plan to pay a total of $220 million this year and for each of at least the next two years.