Montana Senate Passes Tax On Tobacco and E-Cigarettes

Mar 30, 2017

A tax increase on cigarettes and chew took a step forward today in the Montana Senate. The proposed tax expansion would for the first time include e-cigarettes.

Senate Bill 354 sponsored by Helena Democrat Mary Caferro is proposing a $1.50 tax increase on a pack of cigarettes and at least that much on cans of chew. It would also tax all other tobacco products, including e-cigarettes, at 74 percent of their wholesale price.

The bill passed out of the Senate today following an afternoon debate. According to a fiscal analysis done by the governor’s office, the proposed tax increase could generate more than $50 million in additional revenue in each of the next four fiscal years.

Sen. Caferro says the tax will discourage people from smoking and provide money for a wage increase for healthcare workers. The revenue would also go to Native American tribes, state veterans homes, infrastructure projects and the state’s general fund.

"We know what happens when we raise the tax, people quit, especially kids," says Caferro. "And we know that it generates a stable amount of revenue, as a matter of fact, unfortunately this tax is one of the most stable types of revenue."

While debating the bill, several lawmakers, on both sides of the aisle, told stories of family members who died due to smoking related diseases.

Terry Gauthier, a Republican from Helena supported the bill.

"I personally had to bury both my father and mother-in-law due to lung cancer with both of them," Gauthier says. "With that being said, I do oppose smoking. The healthcare cost alone to support my father and mother-in-law, it was in excess of a million dollars that we spent trying to keep them alive because they smoked cigarettes. I’ll be honest that's unsatisfactory, and that really does piss me off."

But Republican Senate President Scott Sales, who says he’s also had family members die of cancer, says this bill is bad tax policy.

"This tax is punitive to the people least able to pay it," Sales says. "We shouldn’t balance our budget on the backs of these people that are the poorest income earners in our state. And quite frankly, we don’t need the money. We can get out of this session living within our means without a tax increase."

Senate Bill 354 passed on a 27-22 vote and will now move the House for debate.