Cigarette tax proposal targets smoking while raising revenue

INDIANAPOLIS (AP) – Health advocates and some lawmakers hope that raising Indiana’s cigarette tax by $1.50 per pack will help tamp down the state’s smoking rate, which is among the highest in the nation.

Public health officials say the increase is a proactive approach toward reducing the smoking rate – more than 20 percent of Indiana adults smoke – and would serve as a deterrent for young people to even begin. The proposal also comes at a convenient time: Republican statehouse leaders are pushing an infrastructure funding proposal that would take money currently devoted to general programs, including health care spending.

In Indiana, a reliably red state where public discussion often focuses on tax cuts not increases, the likelihood of it getting approved is far from certain. GOP leaders are already pushing a 10-cent increase to the state’s 18-cents per gallon gasoline tax, as well as additional vehicle registration fees. Some lawmakers in the Senate have signaled the cigarette tax increase proposed in the House bill may be a bridge too far.

“It’s not popular over here, but that doesn’t mean it can’t happen,” said GOP Senate leader David Long. “Nobody likes taxes. Even sin taxes.”

The measure’s author, Republican Rep. Cindy Kirchhofer, said at a committee hearing Wednesday that she doesn’t want it to be thought of as a tax bill, but a “Healthy Indiana bill.” Still, GOP leaders who control the Statehouse have acknowledged that the additional money brought in by more than doubling the state’s current $1 a pack tax could supplement dollars they want to divert toward fixing roads and bridges.

States across the nation have increasingly turned to tobacco taxes to fill holes in their budgets, often putting the money toward education or health care. Indiana currently has the 37th lowest cigarette tax in the U.S., according to The Campaign for Tobacco-Free Kids.

As written, the cigarette tax bill would send just over half of an estimated $406.8 million to the general fund in fiscal year 2018, while directing roughly 27 percent to Medicaid and other small amounts to mental health and pension relief, among other things.

But tax hike aside, other aspects would go a long way toward improving the state’s health, advocates say.

The measure would also raise the smoking age to 21, put more money toward tobacco cessation and prevention programs that have historically received less money than the Centers for Disease Control and Prevention recommends, and repeal the so-called “Smoker’s Bill of Rights,” a set of employment protections.

Passing it would help address Indiana’s “miserable and embarrassing state of health,” said former health commissioner Richard Feldman. “It’s time to right the ship and restore the state’s commitment.”

In 1991, the year the state passed the Smoker’s Bill of Rights, Indiana’s smoking rate was the 26th worst among states. Since then, it’s gotten worse and now consistently ranks in the bottom ten or 11 states. Public health officials estimate that between 20 and 25 percent of the adult population smokes cigarettes and roughly 11,000 Indiana residents die from smoking-related illnesses each year.

The House Public Health Committee passed the measure unanimously, sending it to the House Ways and Means Committee for consideration. They also approved an amendment recommending revenue be dedicated toward “health-related matters.”

At least two other measures this session would increase the cigarette tax but have not gotten hearings.

Research shows that increasing the excise tax and price of tobacco products is the most effective tool to reduce use, according to a 2017 National Cancer Institute and World Health Organization report. It says that price increases lead some users to quit and prevent potential users from starting.

Information gathered by The Campaign for Tobacco Free Kids shows that of 25 states that increased their cigarette tax by more than 50 cents between 2006 and 2015, all increased their revenue and all but one state saw a decrease in the number of packs sold in their states in the 12 months following the increase.

Indiana’s Legislative Services Agency estimates that increasing the tax by $1.50 would cause the number of packs sold to decrease by 14 percent.

Pro-business organizations, including the Indiana Chamber of Commerce, support Kirchhofer’s measure and its potential for making the state more attractive to businesses. Improving Indiana’s health could draw in new industries, in addition to reducing smoking-related health care costs for employers already in the state, they say.

Critics, meanwhile, contend that the tax hike would hurt convenience stores and other retailers, citing a competitive advantage over some neighboring states that could be lost.

To that argument, Democratic Rep. Charlie Brown of Gary responded: “We just need to talk about the health aspect (for) Indiana, rather than the lost revenue.”

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