A proposal to sharply increase Nebraska's cigarette tax would raise an estimated $93.6 million in annual revenue at a time when the state faces severe budget challenges, Sen. Sue Crawford of Bellevue told the Legislature's Revenue Committee on Thursday.
"I'm putting the cigarette tax on the table as one of the options," she said.
Her bill (LB1117) would also address the state's health care needs, allocating an additional $1.2 million in annual revenue to the state health care cash fund, Crawford said.
An accompanying benefit, she said, is that the sharp hike in the state cigarette tax from 64 cents to $2.14 a pack would discourage smoking, particularly among price-sensitive younger Nebraskans who might quit smoking or never start.
The tax has not been increased for 16 years, she said.
The bill ran into opposition from retailers and business representatives as well as cigar retailers, who would also be impacted by an accompanying tax increase on other tobacco products.
But even more challenging for Crawford was a visible lack of support from within the committee.
"This is picking on a small minority of people," Sen. Curt Friesen of Henderson said, and would particularly "impact the poor who are unwilling to quit."
"I like hearing the bills that reduce taxes," Sen. Lydia Brasch of Bancroft told Crawford.
"We would become a higher tax state," Sen. Mike Groene of North Platte said.
Health care representatives lined up in support of the bill.
Fernando Wilson, speaking for the College of Public Health at the University of Nebraska Medical Center in Omaha, said the measure would reduce health care costs and save lives in Nebraska.
An estimated 2,500 Nebraskans will die this year from causes directly related to smoking, the committee was told.
Annual health care costs tied to chronic diseases related to smoking amount to "a staggering $795 million," said Roger Wiese, executive director of the North Central District Health Department in O'Neill.
A host of health care related organizations, including the American Cancer Society, the Nebraska Medical Association, the American Heart Association and the American Lung Association, supported the bill with written statements.
Sarah Curry, policy director for the Platte Institute, said cigarette taxes are "an unreliable revenue source" and increasing that tax is "not a wise fiscal decision for Nebraska."
A cigarette tax hike "affects lower-income adults the most," she said.
Among other opponents were the Nebraska Grocery Industry Association, the Nebraska Retail Federation and the Nebraska State Chamber of Commerce and Industry.
Scott Lautenbaugh, speaking for the Nebraska Premium Tobacco Association, objected to the accompanying increase in taxes on cigars, arguing that "premium cigars are not a gateway for youth smoking (because) kids are priced out of the market," and he said there is far less likelihood of contracting cancer from cigar smoking.
"Bias against raising taxes is a good bias to have," he also told the committee.