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Gov. Dayton Surprised By $32 Million Tobacco Tax Break

MINNEAPOLIS (WCCO) -- Minnesota's largest anti-smoking advocacy groups denounced a tobacco tax break Tuesday, which passed on the last day of the 2016 legislative session.

Those groups are now pressuring Gov. Mark Dayton to veto the entire tax bill.

ClearWay Minnesota, a coalition of anti-smoking health groups, calls the tax break a major shift in state policy, after lawmakers repealed the annual, automatic tax hike on cigarettes.

"What's important for the health of Minnesota, and especially Minnesota's kids, are keeping tobacco prices high," said Anne Mason, public affairs manager for ClearWay Minnesota. "And what an inflator does too is to keep the price high with inflation over future years."

The tax changes will cost the state $32 million in future taxes. Repealing the automatic cigarette tax hike will cost $26 million in taxes over next three years. Lawmakers also cut $6.2 million in taxes on e-cigarettes.

The tax breaks were passed on Sunday by Democrats and Republicans alike on the last day of the chaotic 2016 legislative session, buried in a tax bill containing hundreds of other items.

Even the Democratic Gov. Dayton says it was a surprise.

"I don't know where it came from, I don't know who was behind it, but it is just very, very distressing," Dayton said.

Republican leaders who support the change say it is bad public policy to automatically raise anyone's taxes, and they strongly deny the cigarette tax change is a tax break at all.

"We didn't reduce the tax or give a tax cut or a tax break to anyone," said Rep. Kurt Daudt, the GOP house speaker. "We simply removed the inflator that would automatically increase the tax over time. It's horrible policy."

But ClearWay Minnesota say studies show that lowering the tobacco tax means more smokers, especially children.

"We know that keeping tobacco prices [high] is good public policy because it keeps kids from a lifetime of addiction and death and disease from smoking," Mason said.

A spokesman for Dayton said he will spend the next few days reviewing the provisions of the tax bill before deciding whether to sign it.

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