Cigarette Tax Hike for Kentucky?

State panel endorses increase to $1 per pack

FRANKFORT, Ky. -- Smokers would pay more for their cigarettes under a proposal endorsed recently by a panel appointed by Kentucky Gov. Steve Beshear.

The Blue Ribbon Commission on Tax Reform on Nov. 19 gave an initial OK to increasing the cigarette tax to $1 a pack from the current 60 cents, according to a CBSNews report.

The news wasn't welcomed at Bo's Smoke Shop in Lawrenceburg, where the price for a pack of the most popular Marlboro cigarettes would increase to $5 a pack.

"I don't think the customers are going to like it," cashier Terri Taylor told CBS. "They're already complaining about how high cigarettes are."

The proposed cigarette tax hike, if approved by lawmakers, would be the second since 2009 when it was doubled from 30 cents a pack.

Cigarette tax increases typically provide only a short-term revenue increase followed by a decline because people tend to giving up the habit rather than pay the higher prices, according to the report.

Beshear appointed the tax panel earlier this year to recommend a simpler tax code that would generate enough revenue to meet state needs even during recessions.

Despite the state's still-strained budget, members of the group have ruled out some unpopular proposals, including implementation of a 6% tax on groceries, which would have generated about $500 million a year. They also tossed aside a proposal that would have reinstated an estate tax in Kentucky.