Indiana House Republicans are proposing a $1 increase in the cigarette tax to help indirectly fill the budget hole caused by shifting all the state sales tax on gasoline to road funding.
Originally House Republicans had planned to shift the entire state sales tax on gasoline to the road fund over a three to four year period. However, due to a public outcry, that shift will now occur over a one year period. Such a move would cost the general revenue fund nearly $300 million annually.
House Ways & Means Chairman Tim Brown says the $1 increase in the cigarette tax would generate about $287 million a year, with $7.5 million going to tobacco cessation, the rest would go up to shore the state’s Medicaid fund. That in turn frees up general revenue dollars currently going to Medicaid.
The House GOP road plan still contains increases in the state’s gas and fuel taxes so that they are adjusted to inflation.
The House GOP budget also includes more money for education, workforce development and dealing with the state’s opioid and heroin epidemic. It also leaves a reserve of about $1.9 billion.
Dr. Brown spoke with reporters this afternoon. You can hear him in the Leon-Tailored Audio above.