Nicotine addictions could get considerably more expensive in Vermont.
The Senate Committee on Finance this evening voted out its version of the miscellaneous tax bill, and it includes a hefty increase in the cigarette tax.
The House’s tax bill already included a 27-cent per-pack increase on cigarettes. Under the Senate plan, the surcharge would rocket up by a full dollar. Lawmakers expect the tax to raise more than $9 million in new tobacco revenue – nearly $6 million more than the House plan. The Senate uses the extra money to reduce some of the health-care taxes on which Gov. Peter Shumlin had relied to help close next year’s budget gap. Under the Senate plan, hospitals will pay about $4 million less than they would have under the House version. A tax on health-insurance claims would be reduced by $2 million.
Shumlin hates the plan, largely because of the regressive nature of the cigarette tax. His aides also say the tobacco tax is unreliable – as smoking rates go down, they say, so too will the tax revenue it generates.
Shumlin lobbied the Senate hard to go with his proposed tax on dental clinics – which would have raised about $6 million. Senate President John Campbell rejected the governor’s push, saying he wanted to reduce as many health-care taxes as possible. Higher costs for providers, he said, will simply be passed on to consumers in the form of higher insurance premiums.
The Shumlin, House and Senate tax proposals all raise about the same amount of money, from $23.75 million (Shumlin) to $24.5 million (the Senate).
The Senate will use the extra money to buy back some of Shumlin’s proposed cuts to human services. Likely recipients of the budget-cut reprieve are services for homebound elders and substance-abuse programs in public schools.
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