This legislative session, the Indiana General Assembly again debated raising the state’s cigarette tax for the first time since 2007.
Like previous years, lawmakers concluded they shouldn’t make any changes.
Senate Republicans decided last week to drop a proposal from their budget to increase the tax rate from 99.5 cents-per-pack to $1.50. The determination was made despite a coalition, which included several health and business groups, pleading with legislators to bump the tax to help curb the use of tobacco products and generate more tax revenue.
In January, we argued there were both positives and negatives to an increase in the cigarette tax. Indiana currently ranks 38th lowest in the country in cigarette taxes, with 21.8% of all Hoosiers considered smokers, but 60% of all tobacco users are of lower income.
Republican Senate President Pro Tem Rodric Bray said the cigarette tax was being stripped from the budget because he, and other senators "want(ed) 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."
That same day, April 8, new tax proposals emerged as part of the state’s budget; but instead of targeting cigarettes, it was for vaping liquids.
The Senate’s vaping tax proposal mixes wholesaler and retail taxes while the House’s plan would establish a flat 10% tax at retailers.
Vaping tax advocates want a 15% retail tax, which would amount to about $1.50 for a two-pack of vaping pods, according to wire reports. Critics of the plans said the Senate’s plan was far too confusing, and that the House’s proposal was a "measly one-tenth" of the cigarette tax.
The proposed cigarette tax was estimated to bring in $150 million in tax revenue towards Medicaid while the 10% retail tax on electronic cigarette liquids would total $5 million.
One lawmaker, Rep. Ryan Mishler, R-Bremen, said that the vaping tax would show kids it’s "dangerous to have a parity with tobacco."
According to the Centers for Disease Control and Prevention, 6.2 million students in the U.S. currently use a tobacco product.
Truth Initiative, America’s largest nonprofit public health organization against nicotine addiction, reported 18.5% of high school students in Indiana used e-cigarettes at least once per month in 2018. That same report showed that 6.7% of adults in Indiana used e-cigarettes.
It’s hard to believe that a tiny bump in vaping taxes will have any impact on youth usage. It would take a much larger increase for that to happen, and even then it’s not guaranteed the price will curb use since thousands of teens are already addicted to the products.
The proposed vaping tax won’t improve public health in a big way — it will only bring in a few extra tax dollars to the state while creating more financial burdens for Hoosiers. If the Legislature wants to make a real difference on the issue, it will need to go a different route.