Gov. Janet Mills (D) proposed a new one-dollar-per-pack tax increase on cigarettes Friday. The tax proposal comes as Mills attempts to stabilize the 2026-2027 budget in the face of an impending half-billion-dollar budget shortfall, plus a shorter-term $118 million Medicaid deficit.
“This was a difficult budget to put together. Our economy is strong, but our revenues are leveling-off, and while prior legislatures have made many important and worthwhile investments, we have to consider what we can sustain in this budget cycle,” said Mills, commenting on her biennial budget proposal.
In a memo released last week, the governor’s office claimed that the new proposal “rejects broad-based tax changes,” but it appears income tax increases are the only tax increase or fee increase Mills is totally ruling out.
The budget proposed by Mills contains the first cigarette excise tax increase in the state since 2005.
[RELATED: Maine Faces $949.2 Million Budget Shortfall for 2026-2027…]
Gov. Mills’ proposal would increase the tax per pack from two dollars to three, a massive 50 percent increase.
This tax hike proposal follows the implementation of Maine’s largest tax increase in decades: the new one-percent paid leave payroll tax that took effect on Jan. 1.
While taxes on tobacco — some times referred to as “sin taxes” — have have often been proposed by left-wing politicians as a means of reducing smoking and boosting public health, Mills has dropped that pretense altogether. Instead, her proposal is a naked attempt to harvest tax revenue to Maine’s smokers
The biennial budget would also raise the excise tax on non-cigarette nicotine products by the same percentage, increase taxes on popular vapes and nicotine pouches.
The governor hopes the revenue generated by the new tax will help fix the massive budget shortfall created by spending under her administration, especially spending within the state’s medical welfare program, MaineCare.
“Increasing Maine’s cigarette and other tobacco products taxes would generate approximately $80 million in revenue to the General Fund over the biennium,” said Mills’ office.
An $80 million revenue increase will do little to make up for the billion-dollar predicted shortfall — especially if price-sensitive smokers quit, smoke less, or purchase cigarettes in New Hampshire, thereby forgoing the tax altogether.
Mills tax proposal is at odds with modern progressive values, which typically focus on raising taxes on the wealthy.
The tax increase, as with other tobacco taxes, is set to disproportionately affect low-income Mainers, with nearly three-quarters of smokers nationwide coming from lower-income communities.
The new tax comes after Mills allowed a new law to go into effect in April, imposing a massive tax increase on non-tobacco-based nicotine pouches such as Zyn.
[RELATED: Zynflation: Nicotine Pouches to Soar in Maine Thanks to 42% Excise Tax Hike…]
The new budget proposal also promises to reduce the shortfall by making a variety of cuts to Department of Health and Human Services (DHHS) programs.
One cut removes Supplemental Nutrition Assistance Program (SNAP a.k.a. Food Stamp) eligibility from non-citizens with work authorization who are nevertheless unemployed, possibly saving the state $7.8 million over a two-year period.
That’s the closest Mainers have come to getting information from the Mills Administration about the extent to which non-citizens are consuming welfare benefits.
The state will, nevertheless, continue using taxpayer funds to grant food stamps to other non-citizens.
Mills bragged that her new budget proposal does not increase the state income tax, but she declines to mention that she oversaw a massive one percent payroll tax increase as a result of the Democrat-led push for a paid family leave program.
Much as she promised not to change Maine’s pre-2022 abortion laws, Mills promised during her campaign that she would not increase taxes if she were re-elected.
