Cigarette tax talks to resume Tuesday

JACKSON – Negotiations will resume Tuesday over how much – if any – to increase Mississippi’s 18-cent-per-pack cigarette tax.
House and Senate negotiators have scheduled a meeting for 3 p.m. Tuesday at the state Capitol to discuss the cigarette tax.
Reaching agreement on a cigarette tax increase could provide revenue to ensure car tags do not increase – by hundreds of dollars in some cases – starting July 1.
It will mark the first meeting for the six negotiators since legislators recessed the session on April 2.
House and Senate leaders, with the blessing of Gov. Haley Barbour, agreed to recess – probably until early May – to give them more time to gather information about how federal stimulus funds can be used to plug holes in the state budget caused by a slowdown in tax collections.
When legislators recessed, leaders also said it would give House and Senate negotiators more time to work out a deal on how much to increase the cigarette tax.
Possible help with car tag costs
Several legislators have proposed using revenue from a cigarette tax increase to provide funds to local governments to hold down the cost of car tags.
Earlier this week, the state Tax Commission took action that will result in an increase of as much as 45 percent in the cost of car tags, starting July 1. A portion of the tax on the sale of vehicles is placed in a fund that provides money to local governments to hold down the cost of tags.
Since vehicles sales have dipped during the current economic downturn, there is less tax revenue to put in the fund. Based on that, the Tax Commission voted to provide less money to local governments to cover car tag costs.
Finance Committee Chairman Dean Kirby, R-Pearl, the lead Senate negotiator, said the group will hear testimony Tuesday from the state Tax Commission on the car tag issue.
“If we can’t come together and reach an agreement on a cigarette tax, and I hope we can, we need to start looking elsewhere for revenue to take care of the car tags,” Kirby said.
When the Legislature recessed, the House negotiators were proposing an increase from 18 cents per pack to 75 while their Senate counterparts were advocating an increase to 64 cents per pack with the understanding the tax could increase automatically as the average of the contiguous states increased.
The Senate leaders also proposed an additional tax on the small cigarette manufacturers that did not participate in the settlement of the state lawsuit against the tobacco companies in the 1990s.
House Speaker Billy McCoy, D-Rienzi, said he believes there will be a compromise on the cigarette tax issue.
“House and Senate negotiators have moved toward the other’s positions until only a few cents separate our discussions,” McCoy said.
During the recess, a different set of House and Senate negotiators have been working to craft a compromise on how much – if any – to increase taxes on hospitals to help fund Medicaid.
The House leadership has proposed a $45 million tax on hospitals. Gov. Haley Barbour and the Senate leaders have advocated a $90 million tax.
Contact Bobby Harrison at (601) 353-3119 or


Bobby Harrison/Daily Journal

Click video to hear audio