Blocking of Indiana cigarette tax hike frustrates advocates

INDIANAPOLIS (AP) — Supporters of boosting Indiana’s cigarette tax expressed frustration Friday with a decision by state Senate Republicans to drop any increase from their state budget proposal being released next week.

The removal of the 50 cents-per-pack increase that was included in the House budget bill is the latest rejection of a cigarette tax hike by Republicans who dominate the Senate. For several years, they have blocked any increase of the current 99.5 cents-per-pack rate that was last raised in 2007.

A coalition of health and business groups has pushed for a $2-per-pack increase, calling it a needed step toward driving down Indiana’s 21.1% smoking rate for adults, which was the fourth highest in the country for 2018, according to the federal Centers for Disease Control and Prevention.

Indiana Chamber of Commerce President Kevin Brinegar argued it “boils down to the decision makers in the Senate majority caucus just are not looking at this from the right perspective.”

Brinegar said senators were weighing the tax increase on whether it was needed for the budget rather than using it to reduce smoking.

“The reason we’re advocating for this is to reduce our smoking rate because it has been demonstrated through study after study that raising the tax on tobacco products is the best way to reduce smoking rate,” Brinegar said.

Republican Senate President Pro Tem Rodric Bray said Thursday that the cigarette tax increase was being stripped from the budget plan as it didn’t have enough support among GOP senators.

“If we go with a tax like that — and we very well may do that someday — then we want to make sure that it’s going to really move the needle on some of the health parameters that we really need to move as far as the health of Hoosiers go,” Bray said. “And I guess I felt like, and a number of our caucus members felt like, that we probably weren’t quite there yet to do that.”

Bray said Senate Republicans support a new state tax on vaping liquids. Bray said it should be similar to taxes now charged on cigarettes but didn’t give specifics.

The 50 cents-per-pack increase was projected to raise about $150 million in tax revenue, while the House proposal of a 10% retail tax on electronic cigarette liquids was expected to raise about $5 million a year. That proposed cigarette tax increase had already been scaled back from the $1-per-pack hike endorsed by the House health committee.

Bryan Hannon, an American Cancer Society lobbyist, said anti-smoking groups would continue to push for the cigarette tax increase even if it fails again this year.

“As we’ve said for many years, the cigarette tax is much more than a fiscal policy – it’s the best, most impactful health policy lawmakers can support in the short term,” Hannon said.

A proposed tax on vaping products failed in the last days of the 2019 legislative session — and Brinegar said the health and business groups may oppose the tax this year if it was too low.

“We may end up supporting that as a small step in the right direction, or if it’s not significant enough that we may end up spending our last three weeks fighting to oppose that, too,” Brinegar said.

The state chamber estimates that smoking costs Indiana employers $6.2 billion dollars a year in higher health care costs, absenteeism and lost productivity.

“That’s $6.2 billion a year that is just flushed down the toilet,” Brinegar said. “It’s not there for wages, benefits, to pay for training to keep our workforce competitive, or for plant and machinery equipment upgrades that also keep our businesses competitive.”