COLUMBUS — The tobacco industry on Wednesday urged lawmakers to switch how the state taxes moist smokeless tobacco products from a system based on price to one based on weight.

Opponents, however, countered such a move might benefit manufacturers such as Philip Morris, but cost the state money in the long run.

The Ohio 2020 Tax Policy Study Commission, consisting of lawmakers and Gov. John Kasich’s budget director, has been delving into elements of Ohio’s tax structure in anticipation of calls for reform with next year’s budget.

The administration and legislature have differed over proposals to expand the sales tax base to include professional services, and to raise the tax on hydraulic fracturing oil and gas operations.

Ohio taxes most noncigarette tobacco products — cigars and chewing, pipe, and roll-you-own tobacco — at 17 percent of their wholesale price. 

Cigarettes, however, are taxed at a flat rate of $1.60 per pack.

Monte Williams, a former California tax official now representing the Altria Group and affiliates Philip Morris and U.S. Smokeless Tobacco Co., noted that 22 states tax moist smokeless tobacco based on weight rather than price. 

Sixteen states made the switch in the last 10 years.

He argued that Ohio is losing money as more discount brands enter the market.

“When your average price goes down, your tax goes down, too,” Mr. Williams said. “The fact of the matter is prices fluctuate.”

Anti-tobacco advocates oppose this move and continue to push for higher taxes on cigarette and other tobacco products.

“For one, a weight-based tax does not keep pace with inflation,” said Micah Berman, an assistant professor of public health and law at Ohio State University. 

“So just imagine if Ohio’s [other tobacco] tax had been set by weight in 1993. Such a tax would be about 60 percent lower today in real dollar terms than a price-based tax. … Such a tax would be a very good deal for Altria, but would be less effective in both reducing tobacco use and in generating revenue for the state,” he said.

Mr. Berman said such a move could drive consumers to buy lighter products that are not necessarily less dangerous, and make the products more affordable to youths.

Anti-smoking advocates were partially successful in the current two-year budget enacted last year when the cigarette tax was raised by 35 cents to $1.60 per pack. Mr. Kasich had proposed a $1 hike.

Advocates argue higher taxes encourage more adult smokers to quit and discourage youths from starting. 

A legislative task force focused on improving the state’s poor infant mortality statistics also recently recommended a tobacco tax hike.

Mr. Berman noted that Ohio has the seventh-highest rate of adult smokers in the nation. 

An estimated 40 percent of those between 19 and 64 enrolled in Medicaid are smokers, and the federal-state program spends $1.7 billion a year to treat related illnesses.

That outpaces the roughly $1 billion a year the state brings in from tobacco taxes.

For the first eight months of the current fiscal year through February, tobacco taxes were running 3.9 percent, or $22.8 million, ahead of projections.

“I represent a border community,” said the committee’s co-chairman, Sen. Bob Peterson (R., Sabina), whose southern Ohio district borders the Ohio River. “The state of Ohio is bordered by states that in many cases have much lower taxes on tobacco products.”

Indiana [$0.995], Kentucky [$0.60], and West Virginia [$0.55] all have lower rates. 

Ohio’s $1.60 tax matches Pennsylvania’s, but trails Michigan’s $2-a-pack.

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.

First Published March 31, 2016, 4:00 a.m.