Montana Tobacco Tax Increase Bill Appears to be Defeated (Update)

A bill in the Montana House of Representatives seeking an increase in the tax on cigars from 50 percent of the wholesale price to 74 percent appears to be dead as of Thursday afternoon, as the House Taxation Committee voted 12-8 to submit an adverse committee report, a procedure that makes it nearly impossible to bring it to the full floor for a vote.

To bring S.B. 354 back to life, it would take a favorable vote on Friday from 60 of the 100 state representatives, numbers that do not appear to be feasible given the makeup of that chamber, though the vote could still occur.

After the committee’s vote on Thursday, the sponsor of the bill, Sen. Mary Caffero, D-Helena, told numerous media outlets, including Montana Public Radio, that she thinks the bill is dead.

The bill appeared to have gained some traction by passing the state senate on March 30 by a 27-22 vote, though supporters seemed to know a significant challenge laid ahead in the house. Those fears were confirmed on Thursday when a group of Republican legislators took action to bring the bill to its likely demise, citing a study that the state wouldn’t need the estimated $200 million it would generate in order to close the budget gap after the House Taxation Committee revised its revenue estimates.

Those funds would have been directed to a number of areas, including state veterans’ nursing homes, the state general fund, and health and medicaid initiatives, as well as raising the wages of caregivers for elderly and disabled Medicaid patients.

Numerous Democrat representatives in the house expressed their disappointment that the bill wouldn’t be brought to the floor and that their Republican colleagues would take the action they did, while Republican representatives cited the increased financial burden the tax increase would impose on residents.

Had the tax increase passed, a premium cigar with an MSRP of $10, the cost at the register would jump from $15 to $17.40 before any sales taxes are added, by halfwheel estimates.

The bill also sought to increase the tax on cigarettes from $1.70 to $3.20 for a pack of 20, while moist snuff would be subject to an increase from 85 cents per 1.2 ounces to a number that would be the greater of 74% of the wholesale price or the tax on each pack of 20 cigarettes per 1.2 ounces of moist snuff. All other tobacco products would have been subject to the tax rate of 74% of the wholesale price.

Update (April 11, 2017) — A vote in the House of Representatives on Tuesday failed to garner the required 60 votes in order to keep the bill alive and bring it to the floor for debate, failing by a 42-58 vote.

This story was originally published on April 7.