$1 per pack tax hike on cigarettes opposed by convenience stores

By Shelby Mullis

INDIANAPOLIS — Indiana convenience store owners say a proposed $1 tax hike on every pack of cigarettes would devastate their businesses.

Members of the Indiana Grocery and Convenience Store Association, including President Joe Lackey, testified against the cigarette tax increase in a Senate Appropriations Committee hearing Monday.

Sen. Luke Kenley, R-Noblesville, chairs the first of six Senate Appropriations hearings for the state’s biennial budget. Several Hoosiers asked the committee to consider allocating more money for their departments during a hearing Monday. Photo by Shelby Mullis, TheStatehouseFile.com

The Senate Appropriations Committee kicked off the second half of the legislative session with a hearing on the House Republicans’ proposed biennial budget. Sen. Luke Kenley, R-Noblesville, and committee members tackled one of the more controversial parts of the proposed budget — the cigarette tax.

“It causes us a loss of jobs, as well as the closing of several stores,” Lackey said of the proposed tax. “The reason is Indiana currently has a $1 advantage over the state of Illinois and a $1 advantage over the state of Michigan. We have a 40-cent advantage over Ohio. If we raise it $1, we’ll lose all those sales.”

While Indiana would no longer have that advantage over its surrounding states if the tax hike is signed by the governor, Lackey said business would also leave the state.

Speedway Director of Marketing Gary Kuns oversees the tobacco sector for the company, including cigarettes, tobacco and electronic cigarettes. He said the tax increase would harm the Hoosier employees at their 309 stores across the state.

“In 2016, we had 3,300 associates at our retail stores in Indiana, and had a total payroll of $78 million,” Kuns said. “The tobacco sector accounted for roughly 46 percent or more than $284 million of Speedway’s overall sales and revenue for Indiana in 2016. At the end of the day, these revenues help support jobs.”

Lackey and Kuns were two of several Hoosiers to testify against the cigarette tax hike, proposed by House Republicans in their two-year state budget.

Rep. Tim Brown, R-Crawfordsville, called the increase an effort to improve Indiana’s health and make it easier to fund the state’s roads.

The House Republicans’ road funding plan calls for 100 percent of the sales tax on gasoline to support infrastructure construction and maintenance, leaving a $300 million gap in the general fund each year.

Brown expects approximately $310 to $350 million in revenue each year from the increased cigarette tax to fill that gap.

Supporters of the tax hike said it is a step toward improving Hoosiers’ health, ultimately forcing people to quit.

Bryan Mills, president and CEO of Community Health Network, partnered with organizations across the state, including the Indiana Chamber of Commerce, to create the Alliance for a Healthier Indiana. The organization addresses poor health in the state.

Mills said the Alliance for a Healthier Indiana has come up with several possible solutions to address Indiana’s smoking issue, such as increasing the prices and age requirement, and improving education.

“We think we’re going to tackle opioids? Heroin? Addictions related to that? We have zero chance of doing that if we can’t address something we know we can address.” Mills said.

Kenley said he is unsure whether the cigarette tax hike proposal is the solution to fill the gap left by the House Republicans’ move to put all sales tax on gasoline toward road funding.

“I’m totally focused on trying to figure out how to solve the road problem, and that’s my first and number one concern,” Kenley said. “I think we owe it to our economy and to our citizens for safe roads to get that problem fixed. I think the rest of the budget has to flow in behind that.”

Kenley said it’s too early to know whether he supports an increase on cigarette tax.

Monday’s Senate Appropriations committee hearing is the first of six budget hearings over the next month.

Shelby Mullis is a reporter for TheStatehouseFile.com, a news website powered by Franklin College journalism students.

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