The West Virginia House of Delegates voted 44-55 Thursday to kill a bill that would have increased a tax on tobacco products. The bill was designed to help fill a $270 million budget gap for the upcoming fiscal year.
Senate Bill 1005, as amended in the House, would have increased the state’s cigarette tax by 45 cents, making it a full $1 per pack.
Of that hike, the first $1 million would have gone toward the state’s tobacco cessation program, the next $43.5 million would have been dedicated to PEIA, the state public employee health insurance program, and the remaining balance would have gone to the general revenue budget.
The bill would have also increased the tax on all other tobacco products, including smokeless tobacco and cigars. It was amended in the House to remove a new tax to be placed on e-cigarette liquids, which was in the bill as approved in the Senate.
Several Republican members of the House spoke of the health impacts the bill would bring, such as deterring pregnant mothers and teens from smoking. Others cited potential cuts to state programs if revenues aren’t increased.
“This bill has been dealt to us. One of six whole bills dealt to us. That’s what we have to work with--six bills,” said Del Tom Fast.
“I may hate the thought of increasing taxes but I can’t stand the idea of cutting worthwhile programs like PEIA and the PROMISE Scholarship.”
Many Democrats argued 45 cents is not enough to deter people from beginning or continuing to smoke, including Del. Don Perdue.
“I believe 45 cent tax must die for larger tax to live. I also submit that if we pass 45 cent tax, it will be another decade before you see another tobacco tax increase,” said Perdue. “[The tobacco lobby] will own us for another ten years.”
While many Republicans opposed the bill and stood by a pledge of no new tax increases, others cited the need for revenue in the budget.
“This bill is a critical component to balancing our fiscal year ‘17 budget that passed out of the House Finance Committee yesterday,” said House Finance Chair Eric Nelson, who closed discussion of the bill following three hours of debate.
“This bill is the art of compromise and balance.”
In total, Senate Bill 1005 would have resulted in $76 million of additional revenue for the state.
Both current Senate and House versions of the budget -- under consideration in their respective chambers -- presumed that the tobacco tax hike would pass.
With the budget still looming, Governor Tomblin expressed disappointment with the failing of the bill, stating that tax revenues were critical to achieving a balanced budget.
“You can’t build a structurally balanced budget on one-time money. Both the cuts they have identified to take out of the existing appropriations out there as well as the Rainy Day Fund,” said Tomblin.
“That’s one time money. Once they're gone, they’re gone. It’s kicking the can down the road.”
In the initial call for the special session, Governor Tomblin had also proposed new taxes on telecommunication devices such as landlines and cell phones, as well as a sales tax increase of up to 1 percent. Neither measure has yet to move at all.