FRANKFORT, Ky. -- Kentucky House Democrats are moving on with their proposed budget, which calls for a 25-cent hike in cigarette taxes, despite Governor Steve Beshear's opposition, legislative leaders said.
According to the Associated Press, Beshear, a Democrat, wants the General Assembly to pass an increase in the cigarette tax of 70 cents, and use proceeds to finance hundreds of millions in new bonds. House leaders' plan to ease Kentucky's fiscal woes calls for a cheaper cigarette tax increase for smokers along with a series of new taxes on selected services such as air charters, armored [image-nocss] car services and commercial janitorial services.
"My plan is much more responsible than any plan out there," Beshear told reporters Monday.
Economic forecasters are predicting that Kentucky is facing a $900 million revenue shortfall over the next two years, because of sagging tax revenue and rising costs in government expenses. Beshear has proposed an $18.5 billion two-year spending plan that would impose 12% cuts on public universities and various state agencies.
The governor also wants Kentucky to pass a constitutional amendment legalizing casinos, a plan he says can bring in $500 million right away and $600 million per year once they're fully operational. House lawmakers, however, have been unable to agree on a single plan, and the measure has languished. Beshear has acknowledged his gambling proposal is in legislative trouble and last week began advocating an increase in the state's cigarette tax to $1 per pack.
Currently, Kentucky's tax is 30 cents per pack.
Meanwhile, in New York, a group of state and national health and consumer advocacy groups is embarking on an advertising campaign to promote the idea of raising the state excise tax on cigarettes by $1.50 per pack. This would double the state's current buck-and-a-half tax. The idea is to reduce smoking by making it more unaffordable, said The Watertown Daily Times.
"The impact of price on cigarette consumption is well documented," said Russell Sciandra, director of the Center for a Tobacco Free New York. "A $1.50 increase in the cigarette tax will boost the average price of cigarettes about 25%, reducing the teenage smoking rate 16% and the adult smoking rate 5%."
Participant groups from the Empire State include the New York State Academy of Family Physicians; New York State Nurses Association; New York State Oral Health Coalition; New York Public Interest Research Group; Medical Society of the State of New York; and the state chapters of the American Lung Association and the Campaign for Tobacco Free Kids.
But James Calvin, president of the New York Association of Convenience Stores (NYACS), thinks this is a bad idea. "New York is a cigarette-tax sieve," he told the newspaper. "Raising the tax rate would have all the effect of pouring water into a leaky bucket. It's a false assumption that a higher tax rate would generate more revenue. Partly due to consumption declines, but mostly due to tax evasion, the state collects less cigarette excise tax today at $1.50 per pack than it did in 2001 when the tax rate was 39 cents a pack lower."
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