Wyoming Legislature Set to Consider Tax Hike on Cigarettes at Next Meeting

By Walter Ko

Special to the Wyoming Truth

Wyoming appears to be on course to raise tobacco taxes for the first time in 19 years, and in a rarity, there’s some support for the move.

The Wyoming Legislature’s Joint Revenue Interim Committee held a session on April 28 to consider whether to impose the state’s first tax hike on cigarettes since 2003. The committee voted to prepare a draft bill for discussion and officially settle on a new tax rate on tobacco at its next meeting in September.

Wyoming imposes one of the lowest tax rates on tobacco products in the United States. According to a January report from the Federation of Tax Administrators, Wyoming is tied with Virginia in imposing the 44th lowest cigarette tax in the country. Georgia, Idaho, Missouri, North Dakota, North Carolina and South Carolina are the only states with a lower rate than Wyoming.

Wyoming levies 60 cents in tobacco tax on a pack containing 20 cigarettes, a rate that was reached after five hikes since the tax was introduced in 1951 with a rate of $0.0001 per cigarette, $0.002 per pack of 20.

The state also levies 20 percent of the wholesale price or 10 percent of the retail price as a tax on cigars, snuff and other tobacco products. In 2020, Wyoming moved to impose 14 percent of the wholesale price or 7.5 percent of the retail price as a tobacco tax for electronic cigarettes and vapor material.

The lawmakers all voted for creating the draft bill, but no consensus was reached on how much the hike should be. Ideas ranged from raising the rate by a few cents or significantly raising it to reduce the smoking rate in Wyoming, especially among teenagers.

“I think we ought to think about raising them to a point to that, where it becomes difficult for our youth to purchase,” Sen. Stephan Pappas (R-District 7) said during the session, adding he believes the state should double the rate to make the bill “workable.”

Wyoming reports a higher tobacco consumption rate and has fewer smoking restrictions than most other states, data show.

According to the Centers for Disease Control and Prevention, Wyoming’s cigarette use rate was 18.4 percent for adults in 2019; the national rate was 14.0 percent. Wyoming also imposes no indoor smoking restrictions for private workplaces, schools or other public use facilities.

“If you do consider a tax on cigarettes or an amendment to the existing tax, I urge you to make it a meaningful one, a tax that will deter young people in particular from adopting and taking up a habit that can impact their health for the rest of their lives,” Richard Garrett, a state government relations director for the American Heart Association, said during the April session. “Our research shows us that a meaningful tax truly does have an impact on reducing tobacco consumption by teenagers, in particular.”

Garrett, public health advocates and anti-tobacco activists assert that raising the cigarette tax is an effective means to curb the smoking rate and deter youth from smoking.

Citing the potential to curb smoking, the American Lung Association recommends that Wyoming increase the state’s tobacco taxes and the cigarette tax by $1 or more per pack and encourages the state to boost funding for tobacco prevention and cessation programs.

The association says on its website that it “supports raising tobacco taxes as best practices show making tobacco products more expensive is one of the best ways to delay initiation of youth tobacco use as well as incentivizing current users to kick their addiction.”

Speaking before legislators at the April 28 session, Marguerite Herman, legislative lobbyist for the League of Women Voters in Wyoming, joined the American Lung Association in arguing for a $1 increase in tax on a pack of cigarettes.

“A dollar increase per pack is what the American Cancer Society has supported and that’s where we are on that,” Herman said. “We urge a tax that has meaningful impact on initiation and continuation of use of tobacco.”

The state did, in fact, try to raise the tax on cigarettes in the past, but all recent attempts were unsuccessful.

The latest attempt occurred in 2021 when the Joint Revenue Interim Committee drafted a bill proposing the cigarette tax to be raised by up to 84 cents per pack, but the bill was not considered for further progress despite the committee recommending it by a 6-3 vote.

In 2018, the Wyoming Legislature attempted to raise the rate by $1.60 per pack, but the bill was not considered for an introduction vote at the Wyoming House of Representatives.

Not everyone is a fan of raising the cigarette tax. Local tobacco store owners worry the hike could negatively impact their sales when they already see the number of tobacco consumers dwindling.

“For the locals, it is [challenging]… many locals say they will quit smoking, but out-of-staters will still buy products,” Kirsten Hodgins, manager of tobacco store Smoker Friendly in Rawlins, Wyoming, told the Wyoming Truth. “Many say they will quit because of where the price is now.”

Rebecca White, who manages a tobacco and liquor store in Newcastle, Wyoming, said in an interview with the Wyoming Truth that a tax hike “won’t make people quit smoking,” as “they will just buy cheaper cigarettes to find a way to continue smoking.”

“Expensive cigarettes don’t sell like they used to,” White said. “Everyone is going to buy the cheap cigarettes.”

A cigarette tax increase may improve the state’s financial position. With COVID-19 in force, Wyoming slashed its budget from $3.3 billion to $2.4 billion f0r fiscal 2021-2022, as Gov. Mark Gordon called to drastically reduce state funding to meet an “epic decline in revenue” from the pandemic.

According to the Wyoming Department of Revenue, the cigarette tax resulted in $13 million income to the general fund and $2.3 million to local governments. Wyoming distributes 85 percent of cigarette tax revenues to the general fund and 15 percent to local governments.

If the rate is increased by $1, as public health advocates recommend, revenue would rise to $34.7 million for the general fund and $6.1 million for local governments, assuming the state’s cigarette sale volume remains unchanged.

Staff reporter Madeline Thulin contributed to this report.