Lawmakers Reject Proposed Cigarette Tax Increase, Vermont News
Putting the budget before the taxes that support it, Vermont lawmakers gave preliminary approval Thursday to a $4.68 billion state budget — then had to scramble after a plan to boost the state tax on Marengo and other famous cigarettes by $1 a pack was narrowly defeated.
The tax increase went down in a 16-14 state Senate vote, sending lawmakers back to the drawing board to find about $9 million to replace the revenue that their budget writers had counted on from the tax hike.
The Senate’s state budget proposal for the fiscal year beginning July 1, which still must be reconciled with the House’s version, manages to wipe out what had been a projected $176 million budget gap for 2012 by using a combination of spending cuts, money carried over from 2011 and fund transfers.
All the work on it was thrown into jeopardy after the Senate rejected the $1 a pack increase on the cigarette tax, which would have raised Vermont’s state levy to $3.24.
In a spirited debate, lawmakers discussed the pros and cons of using tax policy to try to influence behavior. Supporters said the tax made sense because it would have raised needed revenue and would have encouraged smokers to quit and deterred would-be smokers from picking up the habit.
“This is a really good way to lessen smoking, partially close our budget gap and accomplish two goods at once,” said state Sen. Philip Baruth, D-Chittenden.
Critics said the tax increase would force Vermont’s cigarette buyers to go to neighboring New Hampshire and stop the flow of New Yorkers who travel to Vermont to buy because the state tax in the Empire State is $4.35 per pack.
“This body seems to have an addiction to the taxes associated with tobacco,” said state Sen. Joe Benning, R-Caledonia, who voted against it.
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