MTPR

Bill Would Raise Taxes On Tobacco, E-Cigarettes

Mar 27, 2017

A proposal to increase tobacco taxes, which would also impose Montana's first ever tax on vapor and e-cigarettes got its first debate in the Senate Monday morning. The bill introduced by Helena Democrat Mary Caferro calls for a $1.50 tax increase on a pack of cigarettes, and at least that much on standard cans of chew. It also proposes 24 percent tax increase on the wholesale price of all tobacco products, including cigarettes and snuff.

Senate Bill 354 would also extend Montana’s tobacco and cigarette taxes to vapor and e-cigarettes.

Caferro says her bill will prevent kids from smoking and create money to fund state health programs.

Senate Bill 354 would send revenue from cigarette and tobacco taxes to state veterans homes, state infrastructure projects, Medicaid services, Native American tribes and the state’s general fund.

Dr. Gregory Holzman, the top medical officer in Montana’s health department, says the proposal would reduce smoking across the state, save lives from smoking related diseases, and reduce healthcare costs:

"If kids didn’t start smoking, smoking would become a thing of the past," Holzman said. "And we would not need to worry about hit plague of premature death and all these increased cost and illness it causes."

The main opponents to Senate Bill 354 are vapor and e-cigarette shop owners.

Ron Marshall owns Freedom Vape LLC in Belgrade and Bozeman.

"I’m trying to help people better their lifestyle and improve their health and I'm treated like a demon and taxed at 74 percent," Marshall asked.

Marshall and other shop owners testified that e-cigarettes help people quit smoking tobacco and should not be in the same tax category as traditional cigarettes.

In 2016, the Federal Food and Drug Administration extended its regulatory authority of all tobacco products to include e-cigarettes.

Others said their businesses would lose money to online and out-of-state sales.

Jeffrey Brewer owns the Man Store in Helena. He says if Montana raises its cigarette and tobacco tax it will continue to push business out of state.

"Countless number of times I’ve had customers tell me 'I went to Idaho this weekend and stocked up on five cartons of cigarettes, so I won’t need any for awhile.'"

A member of Montana’s nonpartisan Legislative Fiscal Division testified that if the bill passed, it could create an estimated 70 million dollars in state revenue over the next 4 years, although that projection did not take into account the possibility of cigarette business going online or out of state.

Montana's last cigarette tax increase was in 2005, when it increased by a dollar to $1.70.