Cigarette tax hike could have clearer path in Indiana without Pence

The Republican Pence, elected as the country’s vice president last month, smothered past proposals with a blanket vow not to raise taxes.

With him gone for the legislative session that begins next month, a coalition of business and health interests say they could get lawmakers to double the tax or more, hiking the price of a pack of cigarettes another $1 to $1.50.

“We can’t put a gun to people’s head and say you will stop smoking, but we can enact some public policy changes that have been proven in other states to positively impact smoking rates,” said Indiana Chamber of Commerce President Kevin Brinegar.

The state’s leading business advocacy group is making a cigarette tax hike a top priority.

The tax hike is paired with proposals to raise the smoking age from 18 to 21, and repeal the “smoker’s bill of rights” to allow employers to refuse tobacco-users who apply for jobs.

Advocates say their intent is to reduce Indiana’s smoking rate, 11th highest in the nation, and an estimated $6.8 billion in health-related costs and lost work time.

Brinegar said past proposals have been doomed, in part because of Pence’s “clear” political ambition when taking office four years ago amid rumors that he wanted to run for president.

“He was going to make sure there were no tax increases that we’re going to be used against him,” Brinegar said.

Incoming Republican Gov. Eric Holcomb has yet to publicly comment on a tobacco tax hike.

But, unlike Pence, he hasn’t ruled it out.

“While this particular proposal will not be part of his 2017 legislative plan, governor-elect Holcomb has assured everyone involved that no idea will be preemptively taken off the table as we work together to make Indiana healthier in this next session,” said his campaign press secretary, Caroline McKinney.

Healthcare advocates calling for the tax hike include the Indiana Hospital Association and American Cancer Society.

As in past years, when they’ve pushed similar measures, they argue that doubling the state’s current 99 cents per pack tax will dent smoking rates and raise money to offset the costs of treating ill smokers, including an estimated $500 million per year in Medicaid spending.

In 2007, when Indiana added 44 cents to the price of a pack, cigarette sales dropped nearly 18 percent — or almost 100 million packs in the first nine months.

That tax hike boosted state revenues about $240 million; the money was used to pay for healthcare for uninsured children.

Back then, Indiana had the sixth-highest smoking rate in the country. The number has improved but Indiana still has more smokers than average. More than 20 percent of Indiana adults smoke, compared to 15 percent nationally.

Doubling the tobacco tax would puts Indiana closer to rates imposed by neighboring states — Michigan charges $2 per pack and Illinois charges $1.98. It would be Ohio’s $1.60 tax and Kentucky’s 60 cents per pack.

That concerns some conservatives including state Senate Tax and Fiscal Policy Committee Chairman Brandt Hershman, R-Buck Creek.

Too much of a hike may drive smokers across state lines to buy cigarettes — an argument made in the past by the Indiana Retail Council.

A 50-cent hike may be more palatable to legislators who balk at the idea of cutting into retailers’ competitiveness, Hershman said.

Last year he opposed a cigarette tax that would have raised money to repair Indiana roads, which he likened to “filling potholes by kicking a smoker in the shins.”

Better to use money raised by any coming cigarette tax hike, he said, to offset money spent on tobacco-related illnesses.

“If you view the tax on your vice as a kind of insurance premium toward the future care we’re going to have to give you, than there’s a linkage I can justify,” he said.