It’s back: a proposal to raise the tax on tobacco products including premium cigars in West Virginia, as the state legislature returns for an extended session to come to an agreement on the 2016-17 budget.
SB 1012 was approved by the state Senate on Friday, which includes a 65-cent per pack increase on cigarettes as well as an increase in the tax on other tobacco products (OTP) from 7 percent to 12 percent of the wholesale price. E-cigarettes would also be subject to the 12 percent tax rate.
The bill passed by a 24-7 vote with three absentees. It now heads to the state House of Delegates, where similar bills have been met with defeats in recent weeks.
The first defeat of the increase came back in March and included a $1 per pack increase on cigarettes, with a second–and somewhat shocking–defeat coming in May as a 45-cent per pack increase was proposed along with the OTP increase. The reason? House Democrats didn’t think the tax was enough. When they partnered with a group of staunch anti-tax Republicans, the bill failed 44-55.
Then on June 3, the house voted against the increase again.
The legislature is looking for ways to close a $270 million budget shortfall, and Gov. Earl Ray Tomblin has rejected the idea of using the state’s rainy day fund as a primary means to do so. The tobacco tax increase would generate approximately $100 million in revenue according to state estimates, and has the support of the governor, who has called on the House to approve it.
The state is quickly approaching a July 1 shutdown if a budget doesn’t get approved. The House convened at 2 pm on Saturday, though no action had been taken as of yet, and some speculate it won’t make it to the floor for consideration until Sunday.
Should the OTP tax eventually get passed, a cigar with an MSRP of $9.50 would go from costing $10.17 to $10.64 by halfwheel estimates.