Vermont Senate Nixes Tax On Cigarettes

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(Host) The Vermont Senate has rejected a plan to increase the state tax on cigarettes by a dollar a pack. The plan was designed to raise $9 million to help balance next year’s budget. The vote was 16 to 14.

The action raises new questions about how the budget shortfall will be addressed.

VPR’s Bob Kinzel reports:

(Kinzel) Over the past few days, Governor Peter Shumlin has brought a number of senators into his office to urge them to reject the dollar a pack tax increase on cigarettes.

Shumlin says he’s concerned that the state will lose revenue if the tax increase goes into place because Vermont smokers will go to New Hampshire to purchase their cigarettes and smokers from Massachusetts and New York will no longer come to Vermont.

Senate Finance chairwoman Ann Cummings supported the tax increase. She said it would raise new money and discourage smoking in the future. 

(Cummings) "In order to get people’s attention you have to have a big hit and a dollar is the minimum hit you can have and we’re working on health care and smoking is a large cause of heart disease, lung disease, just keep going through it and we felt that this was part of our ongoing investment in preventive health care and trying to control the cost of health care so it seemed like a win win."

(Kinzel) Chittenden senator Phillip Baruth said he strongly supported the tax increase for a number of reasons.

(Baruth) "Because it’s much larger than a tax on cigarettes. We’re talking here not only about closing the budget gap I think that’s important we’re also talking about people not spending their lives buying and consuming a product that they are addicted to."

(Kinzel) But Bennington senator Dick Sears said projections of new revenue were overblown because the state will lose a lot of cigarette sales.

(Sears) "When else do we propose a 45 percent tax increase on one item? So it will actually give New Hampshire stores a $20 a carton advantage over Vermont and many of you represent communities on the border with New Hampshire I suppose you probably lost a lot of the business anyways but a $20 tax advantage is quite high."

(Kinzel) And Rutland senator Peg Flory asked her colleagues to remember that cigarettes are a legal product in the state of Vermont:

(Flory) "If it’s going to be legal to have them here why are we raising it by a dollar a pack and letting another state get that revenue? It makes no sense to me. To say we’re doing it for health benefits I think is fooling ourselves."

(Kinzel) The issue might not be dead for the session because the Governor has indicated a willingness to support a smaller increase in cigarette tax.  

For VPR News, I’m Bob Kinzel in Montpelier.

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