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LB 439: Change cigarette and tobacco tax provisions

As introduced: LB 439 would increase the cigarette tax from 64 cents per pack to $1.36 and increase the tax on other tobacco products, other than snuff, from 20% to 31% of the wholesale price.

The 72 cent increase in cigarette tax revenue would be distributed as follows:

    • Ten cents to the General Fund. Five cents of the ten cents is to be used for the Volunteer Emergency Responders Incentive Act if it becomes law this legislative session or next;
    • Three cents to the Health and Human Services Cash Fund would also be amended to increase the amount appropriated from the Health and Human Services Cash Fund for grants and contracts for research cancer and smoking diseases by 3½ cents. The amount to the University of Nebraska Medical Center for cancer research would remain the same;

  •  Thirty cents, but not less than $28 million for the newly-created Health Care and Human Service Provider Rate Stabilization Fund. This fund would be established by section 8 of the bill and is to maintain provider reimbursement rates regardless of how health care reform is ultimately financed;
  • Five and one-half cents, but not less than $5 million to the Tobacco Prevention and Control Cash Fund. This fund is used for smoking cessation programs; and
  •  Twenty-three and one half cents, but not less than $23.5 million to the Nebraska Health Care Cash Fund. If the proceeds from the earmarked portion of the last three items are less than the minimum allocation required under LB 439, the difference would reduce the total allocation of cigarette tax revenues to the General Fund.

Introducing Senator(s): Gloor (priority)

Committee: Revenue

Committee Hearing Date: March 13, 2013

Current Status: Not voted out of committee

Estimated Fiscal Impact: The Department estimates the following revenue impact associated with General Fund and cash funds:

Fiscal Year; General Fund; All Cash Funds; Other Funds; Total Impact

2013-14; ($ 9,782,000); $58,277,000; $23,000; $48,518,000

2014-15; ($11,635,000); $58,122,000; $22,000; $46,509,000

2015-16; ($13,358,000); $57,979,000; $21,000; $44,642,000

2016-17; ($15,070,000); $57,837,000; $21,000; $42,788,000

It is estimated that Departmental cost to implement the bill is minimal.

Voices for Children’s Position: Support (see our testimony)

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