Lawmakers in West Virginia rejected a proposal to increase the state’s excise taxes on cigarettes and e-cigarettes.
Senate Bill 420 would have increased excise taxes on cigarettes and other tobacco products to $1.55 per pack, an increase of 55 cents per pack. Additionally, the bill would have added a tax to non-tobacco products, such as e-cigarettes, adding 7 cents per milliliter to the price of e-cigarette liquid.
Out of the 24 lawmakers seated on the West Virginia House of Representatives Finance Committee, only three voted in favor of the bill.
Putting Businesses Out of Business
State Del. Marty Gearheart (R-Mercer), a member of the West Virginia House Finance Committee, says the legislation would have been bad for communities across the state, including his hometown.
“I live in a border town,” Gearheart said. “I live within a stone’s throw of Virginia, and their tax is already 16 cents lower than ours. Any convenience-type operations, grocery service-type operations, if the bill went through, they just might not survive.”
Michael LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, says cigarette excise taxes disproportionately harm low-income households.
“Published reports indicated concerns with taxing low-income folks and for what would happen in border counties,” LaFaive said. “That suggests to me that lawmakers understand the unintended consequences of this tax proposal. Hiking the excise tax would hurt low-income people, who are more likely to smoke, and create an incentive for those living in border counties to shop across state lines.”
LaFaive says the bill was a cash grab intended to help the state’s financial health, not the public’s health.
“It was an explicit attempt to fill a budget shortfall,” LaFaive said. “While this is not usually the primary reason cited to raise excise taxes on cigarettes, it is not uncommon.”
Andrea Dillon ([email protected]) writes from Holly Springs, North Carolina.
Phillip A. Black and Ahmed Mohamed, “‘Sin’ Taxes and Poor Households: Unanticipated Effects,” South African Journal of Economics, March 1, 2006: https://heartland.org/policy-documents/sin-taxes-and-poor-households-unanticipated-effects/