In a move that surprised some observers, Maryland's Senate recently passed a plan that, while raising taxes, increased tobacco taxes by a much more modest amount than pro-tax groups had hoped and some taxpayer advocates had feared. Maryland's House, meanwhile, has taken a far less moderate course, setting the stage for a showdown between differing approaches.
Last week, Delegates OK'd tobacco tax hikes after the AP reported that the House Ways and Means Committee had approved a proposed increase in taxes on smokeless tobacco products (for example, snuff) from 15 percent to 50 percent. Under the plan passed by the Senate, taxes on such products only rose to 20 percent.
While still noticeable for users of smokeless tobacco products, that increase is modest enough that it might not spur many more cross-border or black-market purchases of snuff--a problem that Maryland has faced for years with regard to tobacco products in general as the result of its high rate of taxation of such products. The increase approved by the House however is much larger, suggesting that it could contribute to such challenges moving forward.
Both chambers seem to have put a proposed cigarette tax increase on the back burner for the time being--good news for smokers already paying $1.70 per pack more in tax than their neighbors in Virginia (or those puffing on smokes smuggled into Maryland from the Commonwealth). Stay tuned to see which approach with regard to taxation of smokeless tobacco products will prevail as the Senate and the House work to reach an agreement.