Indiana could bar minors under 21 from buying cigarettes and raise the tax per pack by $1.50 under a measure approved by a House panel.
House Bill 1578 would boost the tax to just under $2.50 per pack and could generate more than $400 million per year, according to the non-partisan Legislative Services Agency.
Under current law, that money would be divided among several health funds, pension funds and the state's main checking account. But if the tax increased is approved, the distribution of the new revenue would almost certainly be altered in the state budget bill.
State Rep. Cindy Kirchhofer, R-Beech Grove, said HB 1578 will help address the state's high smoking rates and improve Indiana's overall health. The measure also removes employment protections for smokers and directs more money to tobacco-cessation programs.
The panel approved the bill 11-0 Wednesday and sent it to the House Ways and Means Committee where its fiscal impact will be considered.
An approved amendment recommends revenue be dedicated to health-related matters. Kirchhofer said she doesn't want funds going to roads or other appropriations.
Some critics contend the tax hike would hurt convenience stores and other retailers. They say Indiana would lose a competitive advantage it currently enjoys over some states.
But Bryan Mills, chairman of the Alliance for a Healthier Indiana, lauded the committee's action on the bill, saying it will reduce smoking rates across the state.
"Now is the time to break the trend of tobacco use in Indiana for the health and economic wellbeing of future Hoosier generations," Mills said in a written statement.
LSA estimates raising the tax by $1.50 could lead to a 14 percent decrease in cigarette sales in Indiana.
Under current law, customers must be 18 to purchase cigarettes and pay a tax of nearly $1 per pack. The latter ranks the state 37th in the nation. The national average tax is $1.69, according to the Campaign for Tobacco-Free Kids. If the higher tax is approved, Indiana would rank 12th, according to the group.