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Lawmakers debate doubling Indiana's cigarette tax, and where the money should go

Cigarette tax proposal targets smoking while raising revenue
Posted at 2:04 PM, Feb 01, 2021
and last updated 2021-02-01 14:04:20-05

INDIANAPOLIS — The vote to potentially double Indiana’s cigarette tax was delayed at least one week, as Indiana lawmakers debate where the revenue should go.

The Indiana House Committee on Public Health heard testimony from about 10 people on the proposal to increase the state’s tax on cigarettes from $.995 to $1.995 per pack.

Dozens of health care and labor organizations have advocated to increase Indiana’s cigarette tax for years. The tax hasn’t been increased since 2007, said the current bill’s author, Rep. Julie Olthoff, R-Crown Point.

Hoosiers currently pay about $5.75 per pack of cigarettes.

Health advocates say an increase in cigarette tax could be a way to better the health of the state, which is consistently in the lower half of most rankings. The most recent state reports by the United Health Foundation showed smoking use by 19.2% of adults, 41st in the country.

“I think it’s absolutely essential if we’re going to get serious about public health in Indiana, to start with the low-hanging fruit,” said Bryan Hannon of the American Cancer Society. “And that’s addressing our high smoking rate.”

Other lawmakers questioned where the revenue generated from the increase would go. The tax increase would generate about $278 million by 2022, with 56% of that going into the state’s general fund. The revenue would also be split into the Health Indiana Plan Trust Fund, the Pension Relief Fund and the Cigarette Tax Fund, as well as other smaller splits.

Rep. Robin Shackleford, D-Indianapolis, said she would want to see more of the revenue going toward improving the state’s health, instead of the general fund.

“I would be very hesitant to even move this out of committee the way it is written,” she said.

She also said raising cigarette taxes disproportionally affect low-income Hoosiers, and it may not be the right time to do so in the middle of the COVID-19 pandemic.

“I think this is just bad timing, as far as increasing this tax,” Shackleford said.

The vote on the bill was delayed, and could come next week.