Miss. Gives Tax Hike Another Try

N.H. attempting tobacco end-run

JACKSON, Miss. -- Another bill reducing the sales tax on groceries and raising the cigarette tax to $1 a pack heads to Mississippi Governor Haley Barbour (R), after the state House approved a compromise Monday, reported the Jackson Clarion Ledger.

The governor, who has vetoed a previous version, will consider the bill, his spokesperson Pete Smith told the newspaper.

The House approved Senate Bill 3084 in a 79 to 41 vote. The bill is a compromise between the House and Senate to cut in half the 7% tax on groceries and raise the [image-nocss] tax on cigarettes from 18 cents per pack to 80 cents on July 1. The cigarette tax would then be raised to $1 per pack a year later.

Barbour vetoed a bill that phased out the grocery tax and raised the tax on cigarettes to $1 per pack.

State Representative John Moore (R) said the bill is a large tax hike on a portion of Mississippians who smoke. He opposed the bill. House Ways & Means Chairman Percy Watson (D) said smoking is not mandatory.

The bill also requires tobacco companies not included in the 1998 Master Settlement Agreement (MSA) to pay 43 cents per pack to match what companies in the settlement currently pay and would grant companies immunity from future lawsuits, the report said.

Watson said the measure will generate $168.6 million in new revenue from cigarette taxes the first year, compared to a $172.5 million loss from the grocery tax cut. The second year, cigarette tax revenue will increase to $212.1 million with the same estimated $172.5 million loss in grocery sales, he said.

In a letter to lawmakers last week, Barbour said he could not support either bill because the state could lose money.

Meanwhile, in New Hampshire, the state's top two senators, state Senate President Ted Gatsas and Majority Leader Robert Clegg are pushing for an additional cigarette tax, according to the Associated Press. They said it could raise $30 million a year, but industry spokespersons believe the tax would prompt a court challenge and could end up costing the state more than $40 million a year.

The plan would have the state collect major tax revenue from all tobacco companies, including those already paying millions of dollars a year to New Hampshire and 45 other states as part of the MSA.

The proposed tax would be 41.5 cents per pack of cigarettes, separate from the current 80-cent-per-pack tax. Other states have tried similar taxes, but courts, most notably a Minnesota court, have ruled the tax as unfair.

Clegg said the proposal he backs contains provisions that would avoid the problems seen in other states.