Anti-tax group urges Indiana legislators to butt out on cigarette tax-hike

At a hearing on tobacco issues, Paul Blair of Americans for Tax Reform warned against imposing an extra $1 “sin tax” on cigarettes, even though it’s widely favored by health advocates.

“Sin taxes are based often on the false premise that they’ll discourage behavior and fill state coffers,” said Blair, whose testimony conflicted with that of fiscal analysts who predicted the opposite.

Doubling cigarette taxes only hurts smokers who tend to be poor, Blair said, and lead to corruption and crime linked to the smuggling of cheaper cigarettes from neighboring states.

In a nearly four-hour hearing, Blair was the most vehement opponent of a tax hike favored by a coalition of 50 groups including the Indiana State Medical Association, American Cancer Society and Indiana Association of Cities and Towns.

The coalition — Hoosiers for a Healthier Indiana — wants to raise the tobacco tax of 99.5 cents to nearly $2, which would put the average price of a pack of 20 cigarettes at $6.13.

It brings the price of cigarettes closer to those of neighboring Michigan and Illinois, though still well above low-tax Kentucky. It also generates an estimated $240 million a year in extra state and local revenues, analysts predict.

“And the most important thing,” said coalition coordinator Lindsay Lux, “is that more Hoosiers would quit smoking.”

Luz and others said Indiana can no longer afford its high smoking rates. Twenty-three percent of adult Hoosiers — about 1 million people — routinely light up.

Indiana taxpayers already foot the bill for smokers, health advocates say, paying an extra $2 billion in healthcare expenses directly linked to tobacco use.

Hardest hit are babies of low-income mothers, advocates argue. Almost 16 percent of pregnant women in Indiana smoke, while 26 percent of women on Medicaid assistance are smokers. Health officials say smoking during pregnancy causes a myriad of problems for the babies and increases their mortality risk.

Smoking cessation advocates point to 2007, when Indiana raised the cigarette tax by 44 cents and cigarette sales fell nearly 18 percent, by almost 100 million packs, in the first nine months.

Blair doesn’t see it that way, and his voice may carry weight. At least 28 lawmakers — plus Gov. Mike Pence — have signed the American for Tax Reform’s “taxpayer protection pledge” in which they’ve promised never to raise taxes while in office.

Blair’s wasn’t the only group to argue against a myriad of proposals to curb smoking, which include expanding the state’s current smoking ban to include the bars, casinos and clubs that are now exempt.

Leaders of national groups representing makers and sellers of electronic cigarettes testified against added taxes and regulations on those products — proposals also favored by health officials.

A representative from RJ Reynolds Tobacco Co., which has expanded into e-cigarettes, testified that a tax hike will discourage growth of the industry.

Former state health commissioner Richard Feldman urged measures to drastically reduce smoking in public places.

“As long as smoking is allowed, smoking is going to be seen as acceptable,” he said.

But after lengthy testimony, Sen. Ron Alting, R-Lafayette, cast doubt that any recommendations will be forthcoming from his committee when it meets again in October.

“I’m just not sure,” he said. “My job as chairman is to make sure we get all the facts and listen to everybody."