Today the House Public Health Committee voted to approve House Bill 1434, raising the cigarette tax by $1 per pack and establishing a new e-cigarette tax in parity with the cigarette tax.
The bill does several important things for Hoosier health:
Most importantly it provides a significant increase in the price of cigarettes, which is one of the most effective ways to lower smoking rates, according to the U.S. Surgeon General. Because of this policy change, tens of thousands of Hoosiers will quit smoking or never start at all – especially teens and adolescents.
The bill defines e-cigarettes as tobacco products and taxes them in the same manner as other tobacco products. Make no mistake – e-cigarettes are tobacco products, not quit smoking devices. E-cigarettes have been allowed to flood the market and draw millions of youth into nicotine addiction. This bill provides an additional price barrier to keep e-cigarettes out of young hands.
Raising the cigarette tax will generate hundreds of millions of dollars for Hoosier health. The bill changes the current distribution formula for cigarette tax revenues, allocating a much greater portion to Medicaid reimbursements.
This is just the first step. The bill now moves to the House Ways & Means Committee for further consideration. We will continue efforts with other health and business partners to further strengthen the legislation.
Raising the cigarette tax by only $1 per pack means less impact on health.
Increasing the cigarette tax by $2 per pack would generate nearly $350 million in new revenue and over $2 billion in long-term health savings.
It has been 14 years since Indiana last raised the cigarette tax. In that time, we have fallen far behind the curve. A $1 increase just barely gets Indiana back to the national average.
There is an enormous need for public health funding. COVID-19 is putting a huge strain on local health departments, Medicaid enrollments, and the entire public health system. Indiana ranks 48th worst in public health investment.