Sunday, March 18, 2018

Original sponsor of $1 cigarette-tax increase says it's not salable right now but hopes House-Senate negotiation keeps 50-cent hike

By Al Cross
Kentucky Health News

FRANKFORT, Ky. -- The state Senate's version of the budget will not include the House's 50-cent-a-pack cigarette-tax increase and 25-cent-per-dose tax on opioid prescriptions, and the original sponsor of a $1-a-pack hike says it is dead for the legislative session.

Stephen Meredith
"I don't think the dollar's sellable right now," Republican Sen. Stephen Meredith of Leitchfield said in an interview Friday. "I think the 50-cent is." He said that would be especially true as part of a comprehensive tax-reform package, more likely in a special session than the current one.

Senate President Pro Tem Robert Stivers, in announcing that the Senate wouldn't adopt the House taxes, suggested that a cigarette tax could be part of a broad tax-reform package. Republicans want to reduce income taxes, arguing that would attract more employers to the state, and a cigarette-tax hike could make up for the initial decline in income-tax revenue.

Referring to the revenues from tax increases in the House budget, Stivers said, "We are not recognizing any of those at this time" in writing the budget. "I can understand the health-care policy argument on that, and that same health-care policy argument is what makes it a tenuous type of predicate to revenues to build a budget on, because you are going to have a shrinking base, and I don't believe that in and of itself, as a stand-along, one-off tax is something that we should do."

Stivers spoke in the context of the opioid tax, which would be the first such tax in the nation, but the shrinking-base argument is also made against the cigarette tax, and the Lexington Herald-Leader reported that Stivers made that argument against it.

Advocates of increasing the current 60-cent tax to $1.60 argue that it would make some smokers quit, reducing the physical and economic toll that smoking takes on Kentucky. They say a $1 hike is needed because tobacco companies can counter a smaller increase with coupons and discounts, then gradually increase prices, to keep smokers hooked.

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