Proposed Indiana cigarette tax increase has backers, skeptics

INDIANA — A push to raise Indiana's cigarette tax has boosted hopes of a healthier state, but for some it also raises questions.

Among them: Is a $1.50 per pack tax hike enough to make someone quit smoking?

The Alliance for a Healthier Indiana is hoping to cut down on the rate of Hoosiers who smoke and use tobacco products by raising the tax on cigarettes from 99.5 cents to $2.495, increasing the legal age to buy cigarettes from 18 to 21, and increasing funding for cessation and prevention programs around the state. It also hopes to repeal a section of Indiana code that prohibits employers from discriminating against potential employees because they smoke.

The alliance is made up of state partners including the Indiana Hospital Association, the Indiana State Medical Association, Anthem and the Indiana Chamber of Commerce.

Doug Leonard, President of the Indiana Hospital Association, said the alliance is focusing on tobacco usage in the state because it affects other health conditions, such as stroke and heart and lung diseases.

The revenue generated by the proposed tax would replenish a fund created specifically for cessation and prevention programs. In 2001, the fund sat at $35 million, but due to continued funding cuts since then it is now around $5 million. The increased revenue could potentially raise $300 million for the state, Leonard said, and once the tobacco prevention and cessation fund is replenished to $35 million, the rest of the money could go toward other health issues or state infrastructure.

WOULD THE TAX INCREASE WORK?

So, will raising the tax cut down on smoking? A study from the Indiana University Richard M. Fairbanks School of Public Health indicated that it will. It included information on other states that have increased cigarette taxes, showing that when states increased the tax, the sales of cigarette packs tended to decline. When Illinois raised its cigarette tax by $1 per pack in 2012, pack sales decreased 31.2 percent, according to the study.

But a leading opponent of the cigarette tax increase, Indiana Petroleum Marketers & Convenience Store Association (IPCA), takes the stance that increased taxes will drive business to neighboring states. IPCA Executive Director Scot Imus said he doesn’t think an increase in taxes will necessarily decrease smoking, and could possibly incentivize black market tobacco sales.

Indiana, Imus said, is in a competitive position with neighboring states. If the price of a pack went up by $1.50, it would make Indiana’s cigarettes more expensive than its neighboring states. Using that number as an illustration, Imus said Indiana's cigarette packs would cost 90 cents more than Kentucky.

“When you get that big a differential, what you have is an obviously lost sales in Indiana,” said Imus.

In fact, he said customers currently come to Indiana from neighboring states to buy cigarettes, arguing the exact opposite would be true in the case of a tax hike – neighbors would stop buying in Indiana, and Hoosiers might stock up on cigarettes across state lines to seek out “lower tax alternatives.”

Another of his concerns is the emergence of a cigarette black market.

“If I wanted to,” said Imus, giving a hypothetical situation, “I could load my van with Kentucky cigarettes, then go back to my factory where I work in Seymour or Columbus, and sell them out of the trunk of my car.”

HEALTH THE BIGGER ISSUE

Leonard said while it’s possible people will cross state borders to buy cigarettes if the tax increase is approved, it’s not going to stop the alliance from trying to curb smoking rates.

“We don’t address that by saying we’re going to keep allowing people to die from this disease by keeping them from driving across the border,” Leonard said. “When I was a kid, my mom would give me a quarter and I’d go get her a pack from a machine. We don’t have machines anymore, we don’t have that kind of access. It’s been an ongoing effort in society to try to restrict access.”

Thirty-six Indiana counties have some form of tobacco prevention coalition, according to the Indiana State Department of Health. If the tax raise is approved, revenue from the tax could help start programs in additional counties, Leonard said, adding that the group would like to see programs in all 92 Indiana counties.

HOWARD COUNTY

In Howard County, 24 percent of adults smoke, as opposed to the statewide average of 22.9 percent, and 21.8 percent of women smoke during pregnancy, as opposed to 15.1 percent statewide. The county had a $110,000 budget for tobacco control for the time frame of July 2015 to June 2017.

Shirley Dubois, coordinator of the Howard County Tobacco Coalition, said the county has three programs aimed at reducing the number of people who smoke. The two area hospitals, Community Howard and St. Vincent Kokomo, offer classes for adults who are trying to quit smoking. The coalition also directs people to 800-784-8669, an over-the-phone counseling service for people who are trying to quit. For youth, the coalition offers VOICE, a program that tries to prevent teenagers from ever smoking.

“The coalition’s goal has always been to provide a state smoke-free environment,” Dubois said. “And we have not quit our efforts are still to have a comprehensive smoke free policy.”

In Indiana, 18 communities have comprehensive smoking policies, meaning that people are prohibited from smoking in bars, restaurants and work places, according to the Indiana Department of Health in 2014.

A comprehensive smoke-free policy is something Dubois would like to see in Howard County, she said, because too many people, such as bartenders, face smoke where they work. If the county is able to pass a comprehensive policy, it could cut down dramatically the number of people in the county who smoke, she said.

Until then, the county will continue to rely on the cessation and prevention programs available through the coalition, and the additional funding from the cigarette tax could help improve these programs, she said.

Miranda Spitznagle, director of the Indiana Tobacco Prevention and Cessation, said these programs are effective at reducing the number of smokers, and ultimately could save taxpayers healthcare costs related to smoking deaths and illnesses.

WEIGHING FEARS

Imus, though, fears an increase in online sales of untaxed cigarettes, the normal sales of which are heavily regulated.

“Our members get checked regularly to make sure there’s not sales occurring with underage people,” said Imus.

Senate Appropriations Chair Sen. Luke Kenley, R-Noblesville, expressed skepticism over the motivation behind the tax increase.

“If they want this to be ceased, why don’t they argue for making it illegal?” he said. “We’re already doing a lot to make people stop smoking, and we certainly have lower smoking rates than we’ve ever had, both in Indiana and the United States.”

Leonard said the four-part initiative to reduce smoking in the state isn’t arbitrary or meant as a way to judge or punish smokers, it’s a way to reduce health risks associated with smoking.

“It gets down to a point where we shouldn’t have unrealistic debates when we have the lives of our infants at risk or the costs that we’re all carrying in the state,” he said.