House lawmakers pushed the Senate to include a tax increase on cigarettes in their budget, expected to be publicized later this week. Photo by Joe Raedle/Getty Images.

By Whitney Downard
Indiana Capital Chronicle

INDIANAPOLIS — Funding for two large health priorities remains in flux but House Republicans gave senators a proposal on Tuesday, April 11: increase the cigarette tax.

“We haven’t touched a cigarette tax in quite a few years and I honestly think if we’re going to create this big of a program, we need to honestly look at increasing the cigarette tax,” Rep. Chris Judy, R-Fort Wayne said about a public health proposal initiative.

“I would like you to take that back to your (Senate) leadership and really consider that … because this is not going to go away.”

Rep. Chris Judy, R-Fort Wayne, suggests a cigarette tax increase to support health programs. Photo by Monroe Bush for Indiana Capital Chronicle.

Judy, a former tobacco user himself, said lawmakers know that increasing taxes curbs tobacco use. According to the American Lung Association, a 10% price increase on cigarettes reduces consumption by 4% among adults and 7% among youth.

The Campaign for Tobacco Free Kids, using 2022 information from the Centers for Disease Control and Prevention, found that 17.3% of adult Hoosiers smoked – the eighth-highest rate in the country – compared to 5.2% of youth, which it did not rank.

The Senate version of the budget is expected to be publicized this week but Republicans in that chamber have resisted cigarette tax increases in the past.

Public, Mental Health Spark Discussion

Judy’s comments came as the House Ways and Means Committee, the powerful budget-drafters of the chamber, considered both Senate Bill 1 and Senate Bill 4 – which address mental health and public health, respectively.

Under the latter bill, counties can receive additional public health funding so long as they agree to provide a list of public health services.

Judy was far from alone in pushing for the tax, with Rep. Elizabeth Rowray, R-Yorktown, saying it was fair if the expanded duties for local public health departments included smoking cessation programs.

Rep. J.D. Prescott, R-Union City, went so far as to suggest looking at an increase in taxes for alcohol alongside tobacco. Alcohol taxes haven’t been increased in 42 years, he said.

Another of Judy’s colleagues – and a former smoker as well – said he would normally be against the tax increase but it makes sense now.

“I have been resistant to the cigarette tax since I’ve been here but for something like this, I can come over and support (this) with a good conscience that we have a funding stream for it,” said Rep. Ben Smaltz, R-Auburn. “I don’t think the price of cigarettes makes a whole lot of difference to a smoker … I quit when I was ready to quit.”

Senate Bill 4 moved out of the committee on a 21-3 vote.

As Crider outlined his bill’s content, saying a $1 fee on cell phone bills could generate roughly $91 million, he didn’t rule out the cigarette tax as a possibility but favored the more-sustainable phone tax.

Sen. Mike Crider, R-Greenfield Photo from Senate Republicans.

The committee unanimously advanced Senate Bill 1, authored by Sen. Mike Crider, R-Greenfield. That bill would shore up 988 as a mental health crisis response system that could be funded via a phone fee.

“I would gladly take the cigarette tax if we can get it passed on our side. The issue with a cigarette tax (is) if it works well, it’s a decreasing fund or pool of money,” Crider said.

If a cigarette tax encourages Hoosiers to quit smoking, fewer Hoosiers will buy the cigarettes that fund that revenue stream.

Rep. Ed DeLaney, D-Indianapolis, said it would take a few years before the income from a cigarette tax would decline and could possibly be used to kickstart health programs while another, more stable form of funding was identified.

A History Of Resistance

But lawmakers, specifically on the Senate side, have long defied calls for increasing the cigarette tax – actually decreasing the tax on vaping products from 25% to 15% in 2022.

The year before that, during a budget session, the House increased a 50-cent-per-pack tax in their budget proposal, which the Senate stripped out, leaving the tax at 99.5-cents-per-pack. The House’s proposal this year didn’t include a cigarette tax.

That price is 39th-lowest in the nation and hasn’t been increased since 2007.

Before session, health and anti-smoking groups pushed the legislature to raise the cigarette tax to $2. They continued that effort as recently as March 30, when the American Cancer Society Cancer Action Network and Indiana chapter of the American Lung Association appeared before the Appropriations Committee.

“We know that raising the tax will keep our young Hoosiers from becoming daily smokers,” said Tiffany Nichols, the advocacy director for the Indiana chapter of the lung association. “And additionally, of course, helping many Hoosiers (currently smoking) to finally get over that hump and finally deciding to quit.”

Also last month, the Indiana Chamber of Commerce again pushed lawmakers to increase the tax, saying it would be “the best way to improve” in both mental and public health areas.

“Raising the cigarette tax by $2 per pack should be appealing to legislators for the one-two punch it provides: bettering Hoosier health and generating dedicated dollars that can specifically go to the state’s public health and mental health needs,” said Kevin Brinegar, the chamber’s CEO and President, in a March 20 post.

Reducing smoking rates would improve state health metrics, he argued, in turn reducing health care costs for employers – a big target this session. Any tax should be equal across all forms of tobacco, unlike the current structure that charges less for vaping fluids, he said.