Tobacco tax for tech schools?

South Dakota should hike taxes on cigarettes to help bring down tuition at the state's technical institutes, Rep. Mark Mickelson said Monday.

The Sioux Falls Republican submitted two proposals this month to the Secretary of State's Office that would increase the tax on tobacco from 35 percent on wholesale products to 45 or 55 percent and bump up the prices on cigarettes. Up to $20 million of the revenue could then be used to lower tech school tuition and provide scholarships.

Mickelson, who helped spearhead a 2016 effort to recognize tech schools as separate from K-12 schools and universities in the South Dakota Constitution, said the effort is essential to making the schools more competitive in the region.

"You talk to anyone in Yankton or out in western South Dakota and those folks end up going to Norfolk, Nebraska, or Gillette, Wyoming. We can't compete," he said. "Workforce development is a critical issue and I think we have a responsibility to act."

South Dakota currently taxes 35 percent on wholesale tobacco products. That breaks down to about a $1.53 on a 20-pack of cigarettes. The state's tax rate on cigarettes falls below the average of $1.68 per pack, according to the independent Tax Foundation.

Under the pair of proposals, that tax could be hiked by 10 or 20 percent.

The first $30 million from the tax would flow to the general fund, then the next $5 million would benefit tobacco prevention and awareness campaigns. If taxes levied exceed $35 million a year, up to $20 million in additional funds could be directed toward a new fund used to pay scholarships for tech school students, bring down tuition and fees, and create additional workforce training courses.

In 2016, the state's tobacco taxes brought in more than $68.3 million in cigarette and tobacco tax revenue.

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Rep. Elizabeth May, R-Kyle, said the state shouldn't levy additional taxes when South Dakotans are already overwhelmed by the taxes they have to pay.

"They're citizens of South Dakota for crying out loud," May said. "You just can't keep taxing people. Quit spending and taxing and utilize what we already have available."

The last major change to the state's tobacco tax rates came in 2007 when voters approved an increase of 53 cents per 20-cigarette pack and an increase of 67 cents on a 25-cigarette pack.

Supporters of the measure must gather 13,871 valid signatures to be placed on the 2018 ballot.

Follow Dana Ferguson on Twitter @bydanaferguson, call 605-370-2493 or email dferguson@argusleader.com