Matt Mindrum and Vanessa Green Sinders: Raising cigarette tax good for Hoosier health, economy

With consumer prices up more than 20% since 2021, Hoosiers are rightfully concerned about protecting their pocketbooks and providing for their families, employees and future. But there’s an overlooked item that isn’t outlined explicitly on family or business ledgers: the hidden costs of tobacco use across Indiana.

With the eighth-highest smoking rate in the nation—40% higher than fast-growing Florida and Texas—our residents’ heavy tobacco use adds to the expense of health care and taxes that individuals and businesses in Indiana face at a time when the cost of living is already high.

The numbers tell a clear story. Indiana households spend an average of $1,080 each year in state and federal taxes to cover smoking-related government expenses—even if they don’t smoke. In total, tobacco use costs Indiana residents and employers $3.4 billion in annual health care costs. Medicaid alone shoulders a $634 million burden from smoking—more than enough to cover the $458 million Medicaid shortfall forecasted for the current budget year.

Decreasing smoking would make life more affordable for all Hoosiers—and fairer for the millions who don’t smoke but still pay the tobacco toll. Indiana residents and businesses shouldn’t subsidize smoking habits. Tobacco should help cover the cost.

At a time when fewer than one-quarter of Americans rate the economy as “excellent” or “good” and only 41% feel secure in their finances, every dollar counts. Cutting back on tobacco-related costs is one way to improve our financial outlook, freeing up funds for wages, business investments and essential public services. We must do all we can to ensure Hoosiers’ hard-earned money goes toward covering the necessities of daily life and saving for their future.

Raising Indiana’s cigarette tax by a minimum of $2 per pack is one effective way to reduce the smoking rate and lower the cost of smoking in our state.

Currently, Indiana’s cigarette tax sits at just under $1 per pack, the 12th-lowest in the nation. Research consistently shows that meaningful cigarette tax increases result in lower smoking rates, saving lives and money. A tax increase would lead an estimated 45,100 Indiana smokers to quit, prevent 17,800 young people from ever picking up the habit and result in long-term health care savings exceeding $795 million.

What’s more, the issue enjoys strong support from everyday Hoosiers: A September survey of 600 Indiana residents showed that 64% of likely voters support a $2 per pack increase.

An increase in the cigarette tax also would bring in an estimated $356 million annually, covering as much as 75% of the state’s current Medicaid shortfall. By following the example of economic competitors like Florida and Texas, where cigarette taxes are significantly higher and smoking rates are lower, Indiana can realign itself with a healthier, more balanced future.

Having a healthy state is critical to business, which is why the Indiana Chamber included it as one of six pillars in its long-term economic plan for the state, Indiana Prosperity 2035, and the Indy Chamber continues to champion the issue here in central Indiana.

Now is the time to address the high cost that tobacco use imposes on us all. There’s never been a better time to maximize the savings—in dollars and in lives. By raising the cigarette tax, Indiana can ensure Hoosiers aren’t left footing the bill for tobacco’s toll and achieve savings that benefit families, businesses and the state’s long-term health.•

__________

Mindrum is president and CEO of the Indy Chamber. Sinders is president and CEO of the Indiana Chamber.