Opinion Varies On House GOP's Road Plan's Proposed Cig, Gas Tax Hikes

Jan 13, 2016

Credit Jim Grey / https://www.flickr.com/photos/mobilene/

During testimony Wednesday for the House GOP’s road funding plan, local government leaders applauded the potential influx of money to their communities, but taxpayers’ advocates weren’t happy with the source of that new money-higher gas and cigarette taxes.

All three mayors who spoke at the hearing said they support the bill.

Hammond Mayor Tom McDermott says with a current budget of $6 million a year, the city is still $3 million short of being able to overlay and patch what they already have. And he says the bill's dollar-for-dollar matching grant program would help.

"It allows for home rule, which allows us to have debates in our own communities on how we solve the problem locally,” McDermott says.

But Americans for Prosperity’s Justin Stevens argues that taking more money from Hoosier taxpayers with a higher gas tax isn't necessary since there is enough money in the state reserve.

"Our problem is not a lack of revenue,” he says, “but it's a lack of priorities."

Valparaiso Republican Representative Ed Soliday, the bill’s author, says polling shows most Hoosiers would be OK with the gas tax increase, which amounts to about $25.00 a year for the average driver.

On the cigarette tax hike, he says the revenue would replace funds taken out of the General Fund to support infrastructure. All money received from that increase would go to Medicaid.

IU Health representative Julie Clary says projections show the tax increase would lead about 40,000 Hoosiers to quit smoking and could save 14,000 lives.

“The increase would also prevent 55,000 young adults from starting to smoke, saving another 27,000 lives,” she says.

But convenience retailers cry foul. Circle K Vice President Bruce Landini refutes Clary’s claim.

"As the Speaker said on Monday, the dollar increase will put us on par with Michigan and most of Illinois,” Landini says. “Frankly, as a proud Indiana businessman, I cringe at the notion that Indiana is using these two states as a benchmark for tax purposes."

And Landini, who says tobacco accounts for about 40 percent of his sales, says further widening the gap between Indiana and surrounding states will lead to black market activity.

Ways and Means committee members say an amendment will be considered next week to remove the cigarette tax increase from the bill.