Threatened with a looming government shut down due to lack of a budget being in place, the West Virginia House of Delegates has approved an increase in the state tax on cigarettes and other tobacco products such as premium cigars, as well as electronic cigarettes and vapor products. The increase passed by a 63-35 vote with two delegates not voting and two paired votes.
After the state Senate approved the bill on Saturday during an extended legislative session focused on getting a 2016-17 budget together and closing an estimated $270 million shortfall, the bill headed to the House of Delegates where it became subject to a number of amendments before heading to a full vote.
Language that would have preempted local governments from regulating or prohibiting tobacco product promotions and sales within stores, as well as regulating or prohibiting activities covered by other parts of the state code in regards to age increases, marketing, and internet and mail order sales was added during the House Finance Committee hearing, which prompted the Coalition for a Tobacco-Free West Virginia to issue a statement saying it feared that the language in the bill could have gone so far as to trigger legal challenges to local clean indoor air regulations and protection from second hand smoke. The group says that a spokesperson for Gov. Earl Ray Tomblin confirmed that the language was added to the legislation at the request of the tobacco industry before it went into committee hearings this past weekend.
While it made it out of committee with the language intact, an amendment to remove that language passed 79-18 with three delegates not voting when it reached the House floor.
The new increase tacks on an additional 65 cents per pack of cigarettes and increases the tax on other tobacco products from 7 percent to 12 percent of the wholesale price. By halfwheel estimates, a cigar with an MSRP of $9.50 would go from costing $10.17 to $10.64.
E-cigarettes and vapor products will also be taxed, though an amendment passed by the House changed the rate to $.075 per milliliter rather than the proposed point of sale tax.
This was the fourth time that the House of Delgates considered the increase, having previously voted against it in March, May and early June. The increase is expected to generate approximately $100 million in revenue.
A proposed amendment seeking to direct a portion of the money raised from the new tobacco tax into the Public Employees Insurance Agency failed; in fiscal year 2017, it called for the first $43 million raised to go to the PEIA, and beginning in fiscal year 2018, all of the money generated from the tax increase would have gone to the PEIA. Reducing health care costs for public employees has been a bargaining chip during the budget process, and on Sunday the governor promised to introduce legislation to reduce the cost of health premiums for public employees should the tobacco tax increase get approved.
The bill was quickly sent to the Senate for its approval of the amendments, with that chamber voting 29-3 in favor with two senators absent. Once approved by the governor, the increase will go into effect on July 1.
Shortly after this story was published, updated information about the e-cigarette and vapor tax was added.
Update (June 13, 2016, 5:42 pm ET) — Updated this story with information about the West Virginia Senate’s passage of the amended bill.
Update (June 18, 2016) — Gov. Earl Ray Tomblin signed the budget on Friday, meaning the new tobacco tax will go into effect on July 1.