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Convenience Stores, Chamber Clash Over Cigarette Tax Hike

Stores call proposed $1-a-pack hike "devastating"; hospitals point to increased health costs traceable to smoking

Indiana convenience stores are trying to block a proposed cigarette tax hike.

House Republicans' tax proposal was the main focus of attention as a Senate committee conducted the first of seven hearings on a new state budget. The House has proposed raising cigarette taxes by a dollar a pack. The Indiana Grocery and Convenience Store Association warns that would be "devastating" to its members, because Indiana would lose its price advantage over neighboring states. An extra dollar a pack would put Indiana essentially even with Illinois and Michigan, and 40 cents more expensive than Ohio.

The Low Bob's tobacco outlet chain predicts it would have to close 20 stores. Chuck Taylor says his Chuckles Convenience Store chain in southwest Indiana saw an 18% drop in sales the last time Indiana raised cigarette taxes, 10 years ago. And Circle K predicts it'll lose $3 million a year if the tax passes.

But the Indiana Chamber says smoking drives up business health costs by $3 billion a year, with another $3 billion evaporating due to lost productivity.

Senate Republicans have been skeptical of the cigarette tax hike, warning you can't assume it'll keep bringing the same amount of money. Gary Kuns, tobacco marketing director for Speedway convenience stores, says when Illinois raised its tax by a dollar a pack in 2012, it collected less than it had at the lower rate. Community Health CEO Bryan Mills, who's leading a health and business coalition pushing for the tax, says the point isn't the money, but the reduction in the number of smokers. He says that will eventually save Indiana money on Medicaid.

Mills says smoking is Indiana's most glaring health problem, and the one where the means of fixing it is clearest. He argues the state can't hope to achieve its goals of reducing opioid abuse if it can't find the willpower to attack cigarettes. 

(Photo: WavebreakMedia/iStock)

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