By Timothy S. Donahue
Top Takeaways:
Tax hike fails: Nebraska lawmakers rejected a proposal to raise the state cigarette tax from 64 cents to $1.64 per pack.
Vape tax also stalls: Even a scaled-back version of the bill that removed the cigarette increase and kept only a vape tax failed to advance.
Budget pressure remains: The vote leaves lawmakers searching for alternatives to address a projected $125 million state budget shortfall.
Nebraska lawmakers have turned down a proposal to sharply increase cigarette taxes as part of efforts to address a rising state budget shortfall.
The measure, LB1124, would raise the state cigarette tax from 64 cents to $1.64 per pack, a change expected to bring in about $45 million each year. Supporters said the increase might help cover the state’s estimated $125 million budget shortfall.
Sen. Mike Moser, who supported the proposal, urged lawmakers to consider the potential spending cuts if the tax increase failed.
“We could take money out of the property tax relief fund, or we could cut the budget by about 3% — that would solve the problem,” Moser said during floor debate. “So I challenge my colleagues here … come up with a combination of all those that raises $125 million and the problem is solved.”
The proposal also gained backing from lawmakers who portrayed tobacco taxes as a public health measure rather than just a way to generate revenue.
“It’s not about revenue,” Sen. Wendy DeBoer said. “This should be, I think, about the policy, about the regulation, about the taxation, about the consumer behavior.”
Opponents, however, criticized the measure as a regressive tax hike that would disproportionately affect lower-income residents.
“It is a massive, regressive tax hike that only goes to fill gaping holes in our budget and penalizes the poorest Nebraskans,” Sen. Danielle Conrad said.
In a last effort to save the legislation, lawmakers amended the bill to eliminate the cigarette tax increase completely, leaving only a proposed tax hike on vaping products expected to raise roughly $7 million annually.
Even the reduced proposal failed to advance. The measure received 31 votes, two short of the 33 needed to end debate and move the bill forward.
The vote means Nebraska’s cigarette tax will stay the same for now as lawmakers keep looking for ways to close the state’s projected budget shortfall.
