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Indianapolis Star
8 hours ago
- Business
- Indianapolis Star
Indiana cigarette tax just tripled. How much are tobacco taxes now?
Indiana's cigarette tax tripled on July 1. Indiana lawmakers earlier this year approved an increase in the state's tobacco taxes to help plug a $2 billion budget shortfall. Gov. Mike Braun signed off on raising the cigarette tax by $2 a pack and the 200% bump went into effect. The state's cigarette taxes rose from about $1 to $3 a pack. Taxes on other tobacco products, such as cigars and e-cigarettes, also increased. Legislative leaders, when unveiling the tax increase in the final days of the session, said they expect it to raise roughly $800 million over the two-year budget cycle, helping fund the state's Medicaid costs. "Along with revenue comes a really pretty good public policy that was going to help persuade people to either not start smoking or stop smoking at the same time," Indiana Sen. Pro Tempore Rodric Bray, R-Martinsville, said in April. With the tax increasing in Indiana from just under $1 a pack to nearly $3 a pack, the Hoosier State now has the 12th highest state cigarette tax in the country and a higher rate than any of the states that touch its borders. According to advocacy groups like the American Lung Association and the Campaign for Tobacco Free Kids prices per pack are:
Indianapolis Star
3 days ago
- Business
- Indianapolis Star
Indiana's cigarette tax will triple on July 1. Businesses say Hoosiers will spend money elsewhere
When Indiana lawmakers earlier this year approved an increase in the state's tobacco taxes to help plug a $2 billion budget shortfall, they did so at the objection of hundreds of businesses across the state. The 200% tax bump, which goes into effect on July 1, worried convenience store owners who warned state lawmakers in April that increases could hurt the state and local economies. 'Raising the cigarette tax will not reduce smoking but will drive consumers across state lines to purchase cigarettes at lower prices, which negatively impacts sales of responsible small Indiana business owners,' store owners wrote in a letter provided to IndyStar. Advocacy groups, such as the American Cancer Society and the Indiana Chamber of Commerce, have long supported an increase in the tobacco tax to encourage Hoosiers to avoid or quit smoking and bring in additional state revenue. The measure been proposed by the Indiana House in the past, but efforts have fallen short in the Senate. Not in 2025. Indiana lawmakers and Gov. Mike Braun signed off on raising the cigarette tax by $2 a pack, which takes the state's cigarette taxes from around $1 to $3 a pack. Taxes on other tobacco products, such as cigars and e-cigarettes, will also rise. Legislative leaders, when unveiling the tax increase in the final days of the session, said they expect it to raise roughly $800 million over the two-year budget cycle, helping fund the state's Medicaid costs. "Along with revenue comes a really pretty good public policy that was going to help persuade people to either not start smoking or stop smoking at the same time," Indiana Sen. Pro Tempore Rodric Bray, R-Martinsville, said in April. But some convenience store owners say the tax increases could lead to illegal distribution of tobacco products and drive customers out of state, which would hurt state revenues and local businesses. A 200% tax increase is also not reflective of the current economy, Scott Hackleman, the chief operating officer of Herdrich Petroleum, wrote in a late-April letter to Indiana lawmakers. Herdrich operates 20 QuickPix convenience stores, including four in Richmond at Indiana's border with Ohio. 'While the intent behind this increase may be well-meaning,' Hackleman wrote. 'It places a disproportionate financial burden on a small group of adult consumers, many of whom are already facing significant cost-of-living increases across the board.' When Indiana's tax on cigarettes rises from just under $1 a pack to nearly $3 a pack on July 1, the Hoosier State will have the 12th highest state cigarette tax in the country and a higher rate than any of the states that touch its borders. The taxes per pack of cigarettes for Indiana and its neighboring states starting July 1 are as follows, according to advocacy groups like the American Lung Association and the Campaign for Tobacco Free Kids: Joe Lackey, the president of the Indiana Grocery and Convenience Store Association, said he believes the tax jump puts Indiana in a place to actually lose revenue as Hoosiers look to neighboring states to buy tobacco products. Residents from states like Illinois, who saw significantly higher cigarette taxes before Indiana's increase, may no longer see an incentive to drive to Indiana to purchase cigarettes. What's in Indiana's state budget?: Here are the biggest winners and losers 'We were the cheapest state and the surrounding states were much higher,' Lackey said. 'We were selling a lot of tobacco out of Indiana, and that meant that we were collecting a lot of taxes for the state of Indiana that was not coming from Hoosiers.' Lackey said the state may see a revenue bump in June as Hoosiers make their last purchases at the current tax rate. But he worries that businesses may close or cut jobs in the months once the tax bump takes effect. 'We anticipate this is going to be a very devastating tax,' he said. Contact IndyStar state government and politics reporter Brittany Carloni at Follow her on Twitter/X @CarloniBrittany.
Indianapolis Star
23-04-2025
- Business
- Indianapolis Star
Indiana state budget deal: Cigarette taxes go up, public health funding goes down
Show Caption Indiana lawmakers and Gov. Mike Braun have reached a deal on the two-year state budget that's slimmer than what they began with ― but boosted by a $2 increase in the cigarette tax. Legislative leaders had to go back to the drawing board last week after the latest revenue forecast showed a $2 billion drop in expected revenue over the course of the upcoming biennium. This new version cuts public health funding by more than half, dips a bit more into reserves, and adds new revenue from the tobacco taxes, which amount to about $800 million over the biennium. They presented the outlines of the deal in a press briefing the afternoon of April 23, but the actual budget has not yet been posted. Lawmakers will likely vote on the final budget the evening of April 24. "We used to think that when you were relatively flush with cash, that's a challenging budget to craft, and maybe harder than when you're short with cash. I'm not sure that I feel that anymore," Senate Pro Tempore Rodric Bray, R-Martinsville, said. "Trying to come up with a way to fund the budget with a $2 billion shortfall in the official forecast is, frankly, one of the more challenging things I think we've ever done." The massive difference in the April forecast compared to December stems from a number of federal policy actions, from tariffs impacting trade and the stock market to deep federal spending cuts. It also partly reflects a return to normal revenues following a period of exceedingly high revenues during the COVID-19 pandemic era. New revenue in the budget Sen. Ryan Mishler, R-Mishawaka, said the final budget increases the cigarette tax by $2 a pack, which would take the tax from $1 to $3 a pack. He said the tax on other tobacco products will also increase "by the same percentage," which would be a tripling. The roughly $400 million per year that this will raise will go entirely to the Medicaid budget, he said. This is something that advocacy groups and the Indiana Chamber, specifically, have advocated for a long time as a way to raise revenue while discouraging people from tobacco use. The House has pitched it in the budget a few times, but the idea has usually died in the Senate. Democrats, too, have suggested it. "Along with revenue comes a really pretty good public policy that was going to help persuade people to either not start smoking or stop smoking at the same time," Bray acknowledged. "So I think everybody expects that number will decrease over time. But that's a good thing, because we think it means we have fewer smokers." What is getting cut Without seeing the specifics of the bill or its fiscal analysis yet, here are some cuts leaders described: Funding for county public health departments, which focus on preventative health care and education, will be funded at $40 million a year, down from $100 million a year. The House wanted to expand the school voucher program to be universal in this budget, and the Senate didn't. They will both get their wish: Universal vouchers will kick in during the second year only. Higher education funding will get slashed an additional 5%, as will the repair and rehabilitation budget, which pays for capital projects. They "did away with some of those" commissions who haven't met in a while and had "big cash balances." They didn't specify which ones. The new deal also dips into reserves more. While the Senate and the House budgets proposed leaving roughly 12-13% of the budget in reserves, this one will leave "a little north of 10%," Bray said. That could equate to a difference of about half a billion dollars, depending on the exact percentages. The decision to cut public health spending while at the same time expanding voucher options for the richest families is one of the largest disappointments for Democrats, Rep. Greg Porter, D-Indianapolis, said. "Is that making Indiana healthy again? I think it's making us extremely vulnerable," he said. Bray said that close to half of the money counties got in 2024 went unspent, so he thinks some counties are still trying to roll out their programs. "While that's a cut I'm sure they'll be disappointed in, they're also continuing to try to build this up," he said. "We want to continue to try to invest in that." Overall, the state budget will grow 0.8% in 2026 and another 0.1% in 2027. By comparison, local governments are projected to have 1.6% increases in the first year and 5.1% in the second year.
Indianapolis Star
23-04-2025
- Business
- Indianapolis Star
Indiana state budget deal: Cigarette taxes go up, public health funding goes down
Indiana lawmakers and Gov. Mike Braun have reached a deal on the two-year state budget that's slimmer than what they began with ― but boosted by a $2 increase in the cigarette tax. Legislative leaders had to go back to the drawing board last week after the latest revenue forecast showed a $2 billion drop in expected revenue over the course of the upcoming biennium. This new version cuts public health funding by more than half, dips a bit more into reserves, and adds new revenue from the tobacco taxes, which amount to about $800 million over the biennium. They presented the outlines of the deal in a press briefing the afternoon of April 23, but the actual budget has not yet been posted. Lawmakers will likely vote on the final budget the evening of April 24. "We used to think that when you were relatively flush with cash, that's a challenging budget to craft, and maybe harder than when you're short with cash. I'm not sure that I feel that anymore," Senate Pro Tempore Rodric Bray, R-Martinsville, said. "Trying to come up with a way to fund the budget with a $2 billion shortfall in the official forecast is, frankly, one of the more challenging things I think we've ever done." The massive difference in the April forecast compared to December stems from a number of federal policy actions, from tariffs impacting trade and the stock market to deep federal spending cuts. It also partly reflects a return to normal revenues following a period of exceedingly high revenues during the COVID-19 pandemic era. New revenue in the budget Sen. Ryan Mishler, R-Mishawaka, said the final budget increases the cigarette tax by $2 a pack, which would take the tax from $1 to $3 a pack. He said the tax on other tobacco products will also increase "by the same percentage," which would be a tripling. The roughly $400 million per year that this will raise will go entirely to the Medicaid budget, he said. This is something that advocacy groups and the Indiana Chamber, specifically, have advocated for a long time as a way to raise revenue while discouraging people from tobacco use. The House has pitched it in the budget a few times, but the idea has usually died in the Senate. Democrats, too, have suggested it. "Along with revenue comes a really pretty good public policy that was going to help persuade people to either not start smoking or stop smoking at the same time," Bray acknowledged. "So I think everybody expects that number will decrease over time. But that's a good thing, because we think it means we have fewer smokers." What is getting cut Without seeing the specifics of the bill or its fiscal analysis yet, here are some cuts leaders described: Funding for county public health departments, which focus on preventative health care and education, will be funded at $40 million a year, down from $100 million a year. The House wanted to expand the school voucher program to be universal in this budget, and the Senate didn't. They will both get their wish: Universal vouchers will kick in during the second year only. Higher education funding will get slashed an additional 5%, as will the repair and rehabilitation budget, which pays for capital projects. They "did away with some of those" commissions who haven't met in a while and had "big cash balances." They didn't specify which ones. The new deal also dips into reserves more. While the Senate and the House budgets proposed leaving roughly 12-13% of the budget in reserves, this one will leave "a little north of 10%," Bray said. That could equate to a difference of about half a billion dollars, depending on the exact percentages. The decision to cut public health spending while at the same time expanding voucher options for the richest families is one of the largest disappointments for Democrats, Rep. Greg Porter, D-Indianapolis, said. "Is that making Indiana healthy again? I think it's making us extremely vulnerable," he said. Bray said that close to half of the money counties got in 2024 went unspent, so he thinks some counties are still trying to roll out their programs. "While that's a cut I'm sure they'll be disappointed in, they're also continuing to try to build this up," he said. "We want to continue to try to invest in that." Overall, the state budget will grow 0.8% in 2026 and another 0.1% in 2027. By comparison, local governments are projected to have 1.6% increases in the first year and 5.1% in the second year.
Yahoo
14-03-2025
- Business
- Yahoo
Raising Indiana's cigarette tax just makes sense
Indiana's current cigarette tax is 99.5 cents per pack, and a perennial proposal would raise it to $2 a pack. (Getty Images) When a proposal has both a fiscal and health upside you would think it would be popular. But pushes to raise Indiana's cigarette tax have faltered for years. Now is the time to pull the trigger. 'Indiana is an unhealthy state, and one of the big culprits is Hoosiers' high tobacco usage. This impacts the productivity of our workforce, healthcare costs and future economic prosperity in our state,' said Vanessa Green Sinders, the Indiana Chamber of Commerce's president and CEO. 'So, it's disappointing that raising the state's very low cigarette tax is again not getting the buy-in needed, especially when you consider that the tax rate hasn't changed in 17 years and the state has the 11th highest adult smoking rate in the nation,' she said. This is something that we should all be able to agree on.' CONTACT US Indiana's current cigarette tax is 99.5 cents per pack, and a perennial proposal would raise it to $2 a pack. A fiscal analysis shows the $1 increase would bring in about $205 million in the first year. The House has passed it several times, with the Senate blocking it repeatedly. This year, House leadership rightly deferred to the Senate to put that tax into the state budget. And Senate President Pro Tem Rodric Bray at least sounds more open to it than usual. He acknowledged how lean the revenue and budget picture is for the next years. 'That's a challenge. We also have other challenges with Medicaid that is continuing to rear its head,' Bray said. '(It's) probably more on our thought list now than it has been in the past. So yeah, I think it's part of the conversation.' He added that lawmakers won't pass it to simply continue to grow the Medicaid program. 'That's not productive work for us. So that's not how we're going to go about it. But yeah, it is part of the conversation right now,' he said.' Indiana is drowning in health care costs as its Medicaid budget has exploded at an exponential rate. One of the key priorities for the session is to try to contain those costs. Senate Republicans passed a bill to reduce Indiana's Healthy Indiana Plan, which is the Medicaid expansion population added in 2015 under then-Gov. Mike Pence. They have repeatedly implied that these Hoosiers aren't eligible for the taxpayer-paid coverage. They call it 'right-sizing' the program. That's just a nice way to say they are taking insurance away from upwards of 250,000 Hoosiers. Poor Hoosiers. If this tax increase could keep even some of those Hoosiers covered and out of emergency rooms, it would be a win. But the fact is, a cigarette tax increase wins in more ways. That's because cigarette taxes have the added bonus of getting people to quit smoking. And this lowers health care costs for all of Indiana. The American Lung Association said increasing taxes on all tobacco products, including e-cigarettes, is one of the most effective ways to reduce tobacco use, especially among youth. Multiple studies have shown that every 10% increase in the price of cigarettes reduces consumption by about 4% among adults and about 7% among youth. They advocate a $2 increase per pack. A 2022 study showed that cigarette smoking rates among adults by state ranged from a low of 6.7% in Utah to a high of 21.0% in West Virginia. Indiana came in at 16.2%. And what does that ultimately mean? Smoking causes $3.4 billion in health care costs each year in Indiana. I could go on, but it's clear Indiana has a real problem. Raising the cigarette tax can reduce that number and help Indiana's financial picture. I don't see the downside. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
