Cigarette sales tax increase could provide funding for property tax credits

A bill introduced by Sen. Machaela Cavanaugh could more than triple the state cigarette sales tax from 64 cents to $2.14 per pack.

Of that tax increase, $1 would go to the Property Tax Credit Cash Fund, while 50 cents would go to a newly-created Medicaid Waiver Cash Fund. The new fund would free up money from the state’s general fund for other purposes.

According to the fiscal note, the bill is estimated to raise more than $80 million in additional tax revenue annually.

Cavanaugh said she introduced the bill to reduce the negative health outcomes associated with smoking, but also indicated she does not believe in legislating her personal moral views through other so-called sin taxes.

“I know that this is not really an equitable way to tax things, but I felt like if we're going to be discussing tax increases and tax cuts, this is an important one that we should be considering," she said.

At Monday’s legislative hearing, representatives with the American Cancer Society Cancer Action Network, Heartland Family Services and the Arc of Nebraska testified in favor of the bill, praising the potential to reduce smoking deaths and provide funds for Medicaid waiver services.

Representatives from the Nebraska Grocery Industry Association, the Platte Institute and the Nebraska Petroleum Marketers and Convenience Store Association testified against the bill, citing the possibility of losing revenue to neighboring states with cheaper cigarettes.