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W.Va. House kills tobacco tax hike

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W.Va. House kills tobacco tax hike
By Lacie Pierson, The Herald-Dispatch

CHARLESTON ­- The West Virginia House of Delegates has voted against increasing the state’s tobacco tax.

With a vote of 44-55 the proposed increase died in the House Thursday afternoon after almost of debate.

Senate Bill 1005, the tobacco tax increase, was the only revenue measure proposed during the current special legislative session to gain traction among legislators.

It was estimated to bring in $75 million for fiscal year 2017.

The West Virginia Legislature is in day seven of a special session called by Gov. Earl Ray Tomblin with the goal of addressing budget issues affecting the state.

Fiscal year 2017 begins July 1, 2016, and lawmakers are working out a way to balance the budget against a $270 million shortfall in revenue due to falling tax revenues from coal and natural gas.

Tomblin has said he expects lawmakers to stay in Charleston until they pass a budget.

The bill up for consideration Tuesday included a 45-cent increase on cigarettes and other tobacco products. The bill also allocated $1 million to smoking cessation programs, $43 million to the Public Employees Insurance Agency, and the remaining money to the state's general revenue fund.

The $43 million to PEIA was estimated to be enough money for its members to keep their current benefits but experience a 12 percent premium increase.

Debate around the bill has highlighted the struggle between the tax-averse House and the Senate, which was been supportive of some tax increase proposals this year.

Tuesday’s debate included a mixed bag of reasons on both sides of the issue.

Those supporting the bill said it would be helpful in driving down the rate of smoking in West Virginia while helping fund PEIA and supplementing a portion of the state’s budget shortfall.

Arguments against the bill were that it wasn’t a substantial, long-term fix to the state’s budget issues, noting it doesn’t completely fund PEIA and it didn’t create enough general revenue to prevent cuts from happening in other funds, including higher education.

The bill, as it was passed in the Senate last week, included establishing taxes on e-cigarettes and vaping products, but the House exempted those products from the tax on Monday.

The original version of SB 1005 was estimated to provide $78 million in funding to the state, according to the bill. With the exemption for e-cigarettes and vaping products, that estimate was lowered to $75 million Monday, according to a news release from House Republicans.

A 45-cent tobacco tax increase measure also was proposed during the regular legislative session that ended on March 12.

The proposal was increased to a $1 increase by the Senate. When the bill was sent to the House Finance Committee it was amended back to its original 45-cent amount and ultimately died in that committee.