DELAWARE- Tobacco products in Delaware could soon come with a higher price tag.
Under Gov. Matt Meyer’s proposed fiscal year 2027 budget, cigarette and other nicotine product taxes would see significant increases as the state looks to help close a budget gap and generate new revenue. Opinions are mixed, with some small businesses raising concerns.
If approved, the cigarette tax would increase from $2.10 to $3.60 per pack. Taxes on other nicotine products would rise as well, with moist snuff going from 92 cents to $1.23 per ounce, e-cigarette liquid doubling from five cents to 10 cents per milliliter, and other wholesale tobacco products increasing by 10%.
The plan would also broaden what qualifies as a taxable tobacco product to include newer nicotine items such as pouches..
Some supporters of the tobacco tax hike, like Terry Yingling, a Kent County neighbor, said the tax hike is justified.
“It’s still an awful habit. So I say tax it. Let the tobacco users pay for it.”
The proposal is part of a broader effort to close a more than $500 million budget gap and generate about $160 million in new state revenue, with nearly $19 million expected from tobacco changes alone.
However, some small businesses in Kent County say they are worried about what higher prices could mean at the register.
Ty Shaw of Cheswold Tobacco said the tax increases could have major impacts on sales and customers.
“Well, any tax is not great for business. Most of our clientele here tends to be lower income, so that’s really going to hit them hard.”
Shaw said the industry has already faced several recent price increases, and another hike of this size could have significant negative effects.
“I think six times last year there were price increases. And just since January of this year, I think we’ve had 2 or 3. It just seems like it’s not stopping.”
At Lynch Heights Convenience Store, cashier Megan Breedlove echoed similar concerns, saying sharp price hikes could drive customers away.
“When they come to see that the price has changed that much, they’re like, ‘Hey, well, what do I do with that? What do I do now? — We`ll lose half of our customers because that’s what most people come to convenience stores for.’”
Breedlove said if the tobacco tax hike is approved, the impact would extend beyond smokers.
“I just think it’s unfair and that people should vote against it. It doesn’t really matter if you’re a smoker or not. It still affects businesses.”
Meyer unveiled Delaware’s proposed budget last month, and hearings before the Joint Finance Committee are now underway. Lawmakers must approve a final spending plan before July 1.