Increase the state tobacco tax to generate revenue

To generate additional revenue and avoid harmful budget cuts, the legislature should implement a higher tobacco tax that is in line with the rest of the country.

As a result of the COVID-19 pandemic, Georgia is facing an economic and fiscal crisis. The state is projecting a budget shortfall of $3 to $4 billion for fiscal year 2021. Currently, the legislature is considering significant budget cuts that could harm Georgians for years to come. We believe it is critical for the legislature to consider alternatives to painful budget cuts that could slow down economic recovery.

Georgia’s tobacco tax, which is lower than all but two other states, offers an alternative source of revenue to address the budget crisis. Lifting Georgia’s tobacco tax from 37 cents per pack to the national average of $1.81 could generate $600 million in revenue per year.

Why a higher tax on tobacco matters:

  • Georgia has third lowest tobacco tax in the US
  • Georgia spends about $650 million per year in Medicaid alone treating tobacco related disease
  • Raising the tobacco tax to the national average would generate an additional $600 million per year for Georgia

Rather than implementing budget cuts that will accelerate a massive economic downturn and harm Georgians in every community, lawmakers should make an effort to immediately raise revenue. Raising the tobacco tax will help prevent a short-term crisis from becoming a long-term crisis for Georgians.

Current Legislation: Representative Bonnie Rich (R – 97) introduced House Bill 864, which would add a 7% excise tax to vaping products and would require businesses that sell vaping products to register with the state for a $250 fee. On June 25, the House agreed to an amended version that merged HB 864 into Senate Bill 375, sponsored by Senator Jeff Mullis (R – 53). Prior to the amended version, SB 375 would have raised the age of purchase for tobacco products from 18 to 21. The amended version of SB 375 will increase the purchase age for tobacco products to 21, implement robust licensing requirements for businesses that wish to sell vaping products, and place a nominal tax of 5 cents per ML on vaping products. SB 375 passed the Senate and is now heading to the governor’s desk for signature.