Hoosier legislative leaders are open to the idea of hiking Indiana's cigarette tax in an effort to reduce the state's 21.8% adult smoking rate — one of the highest in the nation.
But the top Republicans and Democrats in both the Indiana House and Senate recently said any proposal to raise the current $1 per pack cigarette tax must be accompanied by a specific plan for how the additional money will go toward improving public health.
"The pandemic has taught us that poor quality of health, unfortunately, has dire consequences, and we need to figure out ways to improve Hoosier health," said House Speaker Todd Huston, R-Fishers.
At the same time, Huston said his experience as the former chairman of the budget-writing House Ways and Means Committee taught him that while increasing the cigarette tax is likely to decrease smoking rates, it also will make some state revenue less reliable.
"The whole genesis of increasing the cigarette tax is it's the one thing, more than cessation programs and other things, that's been shown to reduce smoking," Huston said. "So literally the day you implement a new tax rate is the most amount of money you're going to collect if the policy is successful.
"So you have a declining revenue source and you just have to be thoughtful and manage that appropriately."
House Democratic Leader Phil GiaQuinta, D-Fort Wayne, said that makes it challenging to do innovative things with the money raised by a higher cigarette tax because the revenue will decline in subsequent years. But it's probably still worth doing, he said.
"I just don't want it to go back into the General Fund or something like that. I'd like to really see some concrete programs that we're going to use the money for to improve the health of Hoosiers," GiaQuinta said. "There's a lot of needs out there."
The Indiana Chamber of Commerce has recommended boosting the cigarette tax by $2 per pack for a total state tax of $3 per pack.
That would be two cents higher than Illinois' $2.98 per pack cigarette tax. Cigarettes sold in Northwest Indiana still would be a comparative bargain because Cook County ($3) and Chicago ($1.18) each add a local cigarette tax to every pack sold in their jurisdiction.
Indiana Senate President Rod Bray, R-Martinsville, said if the Republican-controlled House endorses a cigarette tax hike — since all tax legislation is constitutionally required to begin in the House — the Republican-controlled Senate would be happy to consider it.
Meanwhile, Senate Democratic Leader Greg Taylor, D-Indianapolis, said if lawmakers want to tax smoking to raise revenue, the best course would be to legalize and tax recreational marijuana as most of Indiana's neighboring states, including Illinois, already have done.
"We're going to be on an island out here by ourselves," Taylor said. "The implementation of medical or recreational marijuana in Indiana would raise more money than any cigarette tax that we could ever think about."
Taylor said a tax on legal marijuana would raise money for a variety of state and local needs and save money if Indiana no longer is locking up people nabbed by police with small amounts of marijuana, including substances legally purchased in a neighboring state.
However, even if marijuana legalization somehow were to win General Assembly approval, Republican Gov. Eric Holcomb has said he opposes legalization as long as marijuana is classified as a prohibited controlled substance by the federal government.
The Legislature is due to convene its four-month annual session Jan. 4 at the Statehouse in Indianapolis.