House committee soundly defeats cigarette tax hike; questions increase about budget hole

CHARLESTON, W.Va. — The difficulty of putting together a state budget got even more difficult for the legislature Thursday evening when the House Finance Committee defeated the cigarette tax bill, 21-3.

The bill (SB 420), as passed by the Senate, would have raised the current 55-cents-per-pack tax on cigarettes to $1.55 per pack. The bill also increased the taxes on other tobacco products from 7 to 12 percent and created a new tax on e-cigarette liquid.

Gov. Earl Ray Tomblin originally introduced the bill. His plan was to raise the tax by 45-cents a pack and funnel the money toward the $120 million funding hole in the Public Employees Insurance Agency’s health insurance plan for state workers.

Longtime Del. Bill Anderson (R-Wood) was 1 of only 3 committee members to vote in favor of the bill Thursday.
Longtime Del. Bill Anderson (R-Wood) was 1 of only 3 committee members to vote in favor of the bill Thursday.

The House Finance Committee returned the increase to 45 cents Thursday afternoon as it worked on the bill. It also approved two amendments eliminating the tax increases on the other tobacco products and the new e-cigarette liquid tax. But when it came time to vote on the full bill it was soundly defeated.

“As a member of the finance committee I want to do what’s necessary to lower taxes so the people have more money in their pockets and they can prosper,” Del. Marty Gearheart (R-Mercer) said. “By taxing those at the bottom rung, we are simply pushing ourselves down and making ourselves worse.”

The defeat of the bill means there’s still a hole in next fiscal year’s budget that totals $170 million with a little more than a week to go before the March 12 end of the regular session. The committee missed a good opportunity to begin filling that hole Thursday, Del. Bill Anderson (R-Wood) said.

“This is a reasonable proposal,” Anderson told the committee. “This moves us within the context of what is doable across the whole House.”

Delegates, both Republicans and Democrats, expressed concern about how the tax increase would impact border communities.

West Virginia Oil Marketers and Grocers Association President Jan Vineyard told them it would hurt.

“Border stability is our number-1 issue for the retail community. When we are not stable on our borders we have a difficult time,” Vineyard said. “It’s estimated that 50 percent of our population live close enough to a border that they will leave for some products.”

Vineyard told Del. Erikka Storch (R-Ohio) the tax increase would hurt her community.

“Forty-five cents certainly doesn’t hurt as much as a dollar. A dollar (per pack) absolutely destroys your area,” Vineyard told Storch. “Any tax is going to hurt.”

Those voting for the bill were Dels. Anderson, Cindy Frich (R-Monongalia) and Carol Miller (R-Cabell). Del. Steve Westfall (R-Jackson) was not in the committee room when the vote was taken.

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