TOPEKA, Kan. -- Kansas Governor Sam Brownback remains committed to the state’s “march to zero” on income taxes, but this commitment could cost drinkers and smokers: during his state senate address last week, Brownback announced a plan that would increase cigarette and liquor taxes in order to cover a projected $648 million budget deficit.
The Kansas City Star reported Brownback proposed nearly tripling the cigarette tax, a 4% increase in the liquor tax, as well as “a slowdown in income tax cuts.”
Budget committee member and State Representative Pete DeGraaf (R) predicted the cigarette and liquor tax hikes would have a difficult time passing. Democrats have already voiced opposition, arguing that consumption taxes tend to unfairly penalize working class citizens: a pack-a-day smoker would spend an extra $547.50 per year under the proposed increase.
“It’s a hit on anybody who smokes, anybody who drinks. But these kind of consumption taxes always hit lower income people harder,” Senator Laura Kelly (D) told the Star. “You’d put them in the regressive tax category.”
Revenue Secretary Nick Jordan countered that “income taxes are on people’s productivity and hard work” while consumption taxes allow people “freedom to decide how much you’re going to spend and where you’re going to spend.”
Others expressed concern that raising the cigarette tax would lead to increased black market activity. Under Brownback’s plan, the state’s current 79-cents-per-pack excise tax would increase by $1.50, coming to a $2.29-per-pack cost—significantly higher than neighboring Missouri’s 17-cents-per-pack tax (the lowest in the country).
Senator Jeff Melcher (R) said many residents in his district already travel to Missouri to get their cigarettes. Himnshu Patel, manager of a Kansas City, Mo., tobacco shop, added that a higher per-pack cost would likely improve his cigarette sales.
“It is a benefit to us on this side of State Line,” he said in an interview with KSHB Kansas City. “It's a lot of money for us, without a doubt.”
Kansas retailers, on the other hand, are concerned the loss off cigarette sales—both from people driving to Missouri and people simply cut back because of the cost—could result in fewer profits and potentially lost jobs.
“What I'm worried about is it's going to slow down,” a cashier for a Kansas City, Kan., c-store told KSHB. “My concern is that it's going to make a lot of people lose their jobs.”
If Kansas lawmakers approve Brownback’s budget, the tax increases will go into effect on July 1.
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