The Indiana Chamber of Commerce expressed frustration that the state Senate is not creating a high enough tax on vaping devices or increasing the cigarette tax. The Senate’s proposed budget rolls back what the House approved earlier this session.
It’s been more than a decade since there’s been a state tax increase on cigarettes and there’s no state tax on e-cigarettes.
Republican Senate leadership proposed a budget that eliminates a cigarette tax increase. The House already approved a $0.50 per pack tax increase, less than the $2 increase health advocates are calling for.
Indiana Chamber of Commerce President and CEO Kevin Brinegar said there’s no reason for legislators to be hesitant in increasing taxes on smoking.
“We just got a statewide survey of employers,” said Brinegar. “And it came back right at 70 percent of them support raising the cigarette tax by $2 a pack or more. So they're not putting themselves at any political risk if they were to do this.”
The Senate’s proposed budget also changes the tax structure the house had approved for e-cigarettes. There are two main types of e-cigarettes: an open system that is able to be refilled with e-liquid and a closed system that cannot be refilled. The suggested budget would put a $0.10/mL tax on closed systems at wholesale and a 10 percent tax on open systems and devices at retail. The proposed taxes on e-cigarettes are much lower than neighboring Kentucky’s.
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Brinegar said if the e-liquid taxes cannot be raised to something comparable to the current tobacco tax, it would be better to have nothing approved at all this session.
"It would be worse for them to pass it,” he said. “Because if we try to come back next year and get it back up to parity, they'll say, 'Oh, wait a minute, we raised that tax last year, we don't need to do this anymore.'"
Brinegar said having higher taxes on tobacco products would save Hoosier businesses money that could instead be used to make businesses more competitive with wages, training, and modernizing equipment.
"Our interest in this is that these products are estimated to cost Hoosier employers as much as $6.2 billion a year and higher health care costs, absenteeism, and lost productivity,” he said.
Brinegar said senators need to look at these taxes through a long-term health lens rather than a short-term fiscal one.
Lawmakers are expected to approve the new state budget in the next two weeks.