Legislature OKs 68-cent cigarette tax

By Bobby Harrison
Daily Journal Jackson Bureau
JACKSON – The Mississippi Senate and House, within minutes of each other and by overwhelming margins, approved on Wednesday a 50-cent increase in the cigarette tax to 68 cents per pack.
The vote came on the first day back in session after a recess of more than a month. The Senate approved the increase by a 40-4 margin after about 90 minutes of debate and minutes later the House did the same by a 102-18 margin.
The Legislature is back in session primarily to craft a budget for the upcoming fiscal year, which begins July 1, and to deal with shortfalls in this year’s budget caused by declining revenues during the current recession.
Earlier Wednesday, Gov. Haley Barbour unveiled his new budget recommendation, which included the $106 million in anticipated revenue from the cigarette tax increase. It also included a tax increase of $90 million on hospitals.
“I think we need to do our budget with the idea we will not see revenue back to normal for three to four years,” he told a Capitol committee room filled with legislators, media and lobbyists. “We’re not going to see business as usual for a while.”
In the past, Barbour has blocked efforts to increase the cigarette tax. Now, he wants another tax, in addition to the 50-cent increase, on smaller tobacco companies that did not participate in the state’s settlement of a lawsuit against tobacco companies in the 1990s. Plus, he also is advocating a tax increase on smokeless tobacco.
It is past the deadline to deal with those issues during the current session. But Barbour indicated that he might place those issues on the agenda for a special session he has called during the current session.
So far, the special session issues include legislation that would prevent the government from taking land for economic development purposes unless it is a major project, and legislation to allow a hospital to be built in DeSoto County.
The cigarette tax increased approved Wednesday by both chambers also included $37 million to prevent an increase in the cost of car tags. Some members complained that more funds are needed to ensure there would be no increase in the cost of car tags.
Both Senate Finance Committee Chairman Dean Kirby, R-Pearl, and House Ways and Means Chairman Percy Watson, D-Hattiesburg, said any increase would be modest.
There was limited opposition by those who said they are against any tax increase.
Rep. Sam Mims R-McComb, said members should not “go home and say you voted to save car tags. That is not true. You are raising taxes to grow state government.” He said money could be found from existing revenue to hold down the cost of car tags.
Local governments will increase the cost of car tag substantially starting July 1 unless legislators provide them money to offset a decline in revenue they receive from car sales, which have slumped during the recession.
The House leaders have tried for the past five years to increase the tax on cigarettes. They said increasing the cigarette tax, the third lowest in the nation, would provide needed revenue and would result in less people smoking, which would save the state money in the long run in health care costs.
Their efforts to increase the cigarette tax have been blocked primarily by the Republican Senate leadership and Barbour.
But this year Barbour relented.
“Certainly, it is not in the amount passed earlier this session by the House, but it does represent a good compromise,” said Watson, referring to the House’s earlier approval of an 82-cent-per-pack increase. The 50-cent increase compromise was worked out by legislators’ leaders during the recess.
The only members from Northeast Mississippi to vote against the cigarette tax increase were Rep. Mark DuVall, D-Mantachie, and Sen. J.P. Wilemon, D-Belmont.
While the cigarette tax increase is on the way to the governor, the hospital tax increase is less certain. The House leaders have said they will compromise at $45 million. Some members of the Senate leadership have said they support the governor’s $90 million proposal.
Contact Bobby Harrison at (601) 353-3119 or bobby.harrison@djournal.com.

Bobby Harrison/NEMS Daily Journal