Tobacco, E-Cigarettes and Cigarette Tax Topics in Interim Study Meeting


On October 6, the Interim Public Policy Committee met for nearly four hours to discuss a host of issues related to tobacco and e-cigarettes.

The group first entertained debate regarding whether smoking should be prohibited in bars, casinos and private clubs, as well as the fiscal impact of such a move. State law was passed in 2012 that prohibited smoking in the workplace with the aforementioned businesses excluded. The Casino Association testified in support of maintaining the carve-out. Representative Charlie Brown (D-Gary) asked the Indiana Chamber’s if its policy was still to support a workplace ban on smoking; we confirmed it is.

The most interesting exchange surrounded whether e-cigarettes should be defined as tobacco products and the potential taxation of them. Proponents of e-cigarettes testified that because nothing burns, no smoke is released and these products should not be classified as tobacco. The liquid in e-cigarettes contains 0, 3, 6, 12 and 18mg/ml of nicotine, thus enabling these products to be used as cessation devices. Prohibiting them and/or taxing them as tobacco products would treat them as products that are as harmful as cigarettes; they are generally considered not to be in that category. A manufacturer of e-liquid testified that a 20-cent tax per milliliter would put him out of business.

Testimony was also provided that Indiana University’s Prevention Resource Center conducted a survey among Indiana high school seniors and found that 25% had used a vaping device in the past month. That was a higher number than had used traditional tobacco products. Both are prohibited for sale to minors.

Further discussion revolved around the impact of taxation on the consumption of cigarettes. Several individuals testified that studies indicate (including one fiscal modeling of Indiana) that a 10% increase in the price of a pack of cigarettes results in a 3-5% reduction in tobacco consumption. The fiscal analysis that was conducted indicated that a 50-cent tax increase on a pack of cigarettes would generate approximately $137 million in additional revenue.

The Indiana Chamber testified that the state’s overall health ranking is 41st nationwide and 39th for smoking. Indiana has decreased from 25.6% to 21.9% of adult smokers in the population since the enactment of the 2012 smoking ban. While acknowledging the studies referenced above, the Chamber also cited a recent study from the Cato Institute that indicates that it may take a 100% increase in the cigarette tax to accomplish a 2-3% decrease in tobacco use.

No decisions were made about any of the topics discussed. The committee will meet again on October 22.

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