Indiana lawmakers appear unlikely to increase cigarette tax

A proposed $1 per-pack hike in Indiana's cigarette tax appears likely to fail for a second straight year, dismaying public health advocates who say a tax increase would be among the most effective ways of lowering the state's high smoking rate and improving its dismal heath ranking.

Last year, legislation died after former Gov. Mike Pence and the GOP-controlled Senate opposed it. This year, it's new Gov. Eric Holcomb and the Senate opposing an increase pushed by House Republicans.

More than half of U.S. states have increased their cigarette taxes in the past 10 years, including other conservative states, according to the Campaign for Tobacco Free Kids. But, in Indiana, where more than 20 percent of adults say they smoke, lawmakers haven't touched the current 99-cent a pack tax since 2007.

"My feeling is, if you don't need a tax, don't enact it," Senate Appropriations Committee Chairman Luke Kenley said.

That has frustrated Tobacco Free Indiana—a coalition of business and health groups—and other advocacy organizations that are pushing the idea.

"We've been putting so much emphasis on our structural infrastructure," said Monique French, the group's chairwoman. "We need to put the same amount of focus on our human infrastructure here."

Cigarette makers oppose the tax hike and suggest it would drive consumers to neighboring states with lower prices.

But public health officials say the reasons for raising the tax are two-fold. It would provide a powerful disincentive to quit or to never start, which would improve overall health and reduce state spending on tobacco-related illnesses. It also could provide additional revenue for health care and smoking-cessation programs that have had funding slashed over the past 15 years.

Sen. David Long said Thursday that he doesn't believe public health factors into the current debate over cigarette taxes. He suggested the measure was pushed merely as a way to backfill money currently spent on health that some lawmakers wanted to divert to infrastructure projects, which is a major Republican priority for the session.

"I know for advocates, it's a health issue—that's why they support it," the Fort Wayne Republican said. "But the reason we're talking about it is it is a budgetary issue—it's a source of revenue."

Indiana has the 12th highest smoking rate in the nation among states, according to the United Health Foundation's 2016 report. Seven of the 11 states with higher smoking rates have increased their cigarette tax more recently than Indiana. Even West Virginia's similarly conservative Legislature raised its cigarette tax rate by 65 cents last year, bringing the total tax per pack to $1.20.

The original bill by Republican Rep. Cindy Kirchhofer contained a cigarette tax increase of $1.50 per pack—and sailed through a House public health committee on a 11-0 vote—that would have brought in an estimated $406.9 million in fiscal year 2018, rising to $435.5 million the following year.

When it was reduced to a $1 increase, the nonpartisan Legislative Services Agency projected revenue would amount to $278.3 million, before rising to nearly $300 million.

Still, Holcomb and some Senate Republicans say they prefer to hold off on a cigarette tax increase. They say they may need to resort to it in the future if congressional Republicans make cuts to Medicaid funding currently available through Obamacare

"If that saber wasn't being rattled in D.C., it would probably be an easier sell in the Senate," said House Speaker Brian Bosma, who backs the increase. "I'm not the person that has to be convinced."