WV TOBACCO Tax Increase
W.Va. tobacco tax hike wins Senate panel approval
CHARLESTON, W.Va. (AP) — West Virginia would nearly triple its cigarette tax and hike its other levy on tobacco to fund health care needs under a measure that cleared a Senate committee hurdle Thursday.
The Senate Finance Committee must now review the legislation amended and advanced by the chamber's Health and Human Resources Committee on a non-unanimous voice vote.
The bill would raise the per-pack tax on cigarettes from 55 cents to $1.55. The tax rate for other tobacco products would climb from 7 percent to 50 percent of their wholesale price.
Officials estimate $128.8 million in annual revenues. As amended, the bill would commit $50 million of that toward public retiree health costs for 10 years. Another $40 million annually would benefit Medicaid, while $6 million would fund anti-tobacco efforts and $1 million would aid a proposed school of public health.
Of the remaining annual revenues, 30 percent each would go to oral health and substance abuse programs. Nearly a quarter would fund in-home senior care, and the rest would help early childhood development efforts.
West Virginia's cigarette tax rate ranks 44th among states, according to 2010 figures from the Campaign for Tobacco-Free Kids. That's still higher than neighboring Virginia, which sports the lowest tax at 30 cents per pack.
Hiking West Virginia's tax to $1.55 would give it the 22nd-highest rate, barring changes by other states. That would be higher than neighboring Kentucky's 30-cent tax and Ohio's $1.25 tax, but still lower than the $1.60 charged by Pennsylvania and the $2 by Maryland.
Bill critics warn that higher taxes will cost retailers in border counties revenues and jobs. Sen. Truman Chafin, D-Mingo, warned that businesses in his district would suffer at the hands of competitors in neighboring Kentucky and Virginia.
"We don't have any supermarkets left in our town now," said Chafin, of Williamson. "You're just sending a signal to get out of this state and do all your shopping on the other side from West Virginia."
But Sen. Dan Foster, a Kanawha Democrat and a physician, asked Chuck Hamsher of the American Heart Association to address cross-border sales. Hamsher said studies show that most smokers buy cigarettes by the pack, and close to where they live or work. That runs contrary to claims that they will travel long distances and buy in bulk to avoid high prices.
"In reality, that's probably a very small percentage," Hamsher told the committee. "In most cases, you don't see a huge amount of running back and forth across borders to buy these. It is still a convenience purchase."
The House health committee is also considering the tax hikes. It held a public hearing Wednesday that drew wrenching stories of lives ruined and lost because of drug addiction, with speakers urging more funding for treatment and prevention.
Ted Johnson's voice trembled as he recounted finding his 22-year-old son dead of a drug overdose in 2007. He finds himself visiting the young man's grave site several times a week, trimming its grass with scissors.
"I will never be the same. I will always be empty," Johnson told delegates. "My life will never be whole because my heart has been ripped and torn to shreds."
But those lawmakers also heard from opponents of providing those revenues through tax increases. One tobacco lobbyist, Chris Marr, predicted that such a proposal would cost retailers lose 40 percent of annual sales, or $400 million, along with a thousand jobs.
"This is an economic concern," Marr said at Wednesday's hearing. "West Virginia businesses cannot sustain a tax increase this large."