Senator: Increased Sin Tax Could Help in Budget Crunch
Senate Bill 534 was introduced in the Senate Tuesday to increase the excise tax on cigarettes and other tobacco products.
The proposal would mean a $1 increase in taxes on a pack of cigarettes to $1.55 total. On all other tobacco products, the tax increases from 7 percent of the wholesale price to 50 percent.
“From a polling standpoint, people say they don’t have a problem with increasing cigarette taxes,” said Senator Bob Plymale, the bill’s lead sponsor.
Plymale said by increasing the tax, studies show a percentage of West Virginians would quit and cease buying the product which would be good for public health.
“The other side of it is right now we’re in a budget crunch,” he said. “That budget crunch is mainly because of our Medicaid budget.”
The state’s portion of Medicaid funding has increased in recent years because of the economic climate which was better in West Virginia during the recession than in many other states. The growth in per capita income, and many other factors, caused the federal matching dollars to shrink.
The bill will use the new revenue to help ease the state’s Medicaid burden for fiscal years 2015 and 2016 sending those dollars specifically to Medicaid accounts. After two years, the tax will go back into the state’s general revenue fund, as it does now.