CHEYENNE -- Some Wyoming lawmakers are proposing to raise the taxes on a pack of smokes and a can of chew.
With all of the state’s penny pinching and budget cutting, the taxes would come at a time when lawmakers are desperately looking for new revenue sources to fund programs such as Medicaid. One proposal is a $1 hike that would increase current tax rates to $1.60 per pack of cigarettes.
Rep. Gerald Gay, R-Casper, is the principal sponsor of the bill. It has yet to be assigned a committee, but Gay said there are sponsors from both chambers of the Legislature endorsing the bill. Advocates say the tax would raise $22.34 million annually.
“The bottom line is that Wyoming needs to reduce tobacco use rates to improve the lives of its citizens and curtail its state budget and tax burden to its citizens,” said Jason Mincer, government relations director for the American Cancer Society Cancer Action Network.
Wyoming spends $136 million on health care costs directly related to smoking each year, Mincer said.
“What we’re dealing with is a shortfall on health care funding,” Gay said. “The bill is designed to fund Medicaid, which is a program a lot of these folks who use these products are eligible for.”
Cigarettes won’t be the only tobacco product facing a tax hike. Rep. Lee Filer, D-Laramie, is proposing a tax increase on smokeless tobacco, cigars and other related products. The tax hike would also be $1, but if the product weighs more than an ounce, it is subject to an additional prorated tax.
Filer said the tax increase would not only provide new revenue to the state, it would also create a fund to start a tobacco awareness program for schools in the state.
Filer said that when he was in public school in Arizona, there were programs to educate young students on the dangers of tobacco. Half of the money generated from his legislation would go to substance abuse programs and tobacco prevention programs in schools. The other half would go to the state's general fund, he said.
“Most people I talk to who use tobacco don’t want their children to use tobacco,” he said. “But we still won’t educate our children on the cons of using tobacco. So why not do it?”
Every time the state raises the price of any tobacco product, the usage goes down, Filer said. Wyoming has the third-highest rate of smokeless tobacco use in the country, he said. The rate of smokeless tobacco use among high school males is 24.7 percent, nearly double the 12.8 percent national average.
If the tax increases pass, up to 60 percent of tobacco sales could be either from illegal or counterfeit products, said Mike Moser, executive director of the Wyoming State Liquor Association.
The other alternative is buying products across state lines, he said.
“If you have a state like Idaho that’s tax is 57 cents a pack, and Wyoming will go to ($1.60), that’s about $6 less per carton,” Moser said. “So people start going to the reservation. They start going online. They go to other places.”
Moser said Wyomingites will now drive to Colorado for lottery tickets, marijuana and, if the tax hike passes, cigarettes.
“Addiction is price-driven,” he said. “And they’re going to get that product out of Wyoming. I call it the law of diminishing returns. It’s when taxes are raised so high, you drive demand out of Wyoming.”
Supporters and dissenters butt heads on whether the tax is a user fee or a regressive tax.
“It’s a user tax,” Gay said.
He’s generally opposed to user taxes. But Gay said he supports this one because of its nature.
“It will save us money,” he said.
Tobacco money has bailed us out before, Gay said.
Moser said the tax is not a user fee. “It’s a regressive tax,” he said.
“This is not a time to pass a tax on hard-working Wyomingites,” Moser said.
A user fee is a term people use so they don’t have to say they’re increasing taxes, he said.
“But they’re increasing taxes,” Moser said.
Mincer said it isn’t a regressive tax if people don’t buy the product.
“They don’t have to pay if they quit,” he said. “It will lower their health care costs and increase their income.”