Mississippi House Bill 364, which raises the state cigarette tax by 50 cents per pack, passed the House last week on a vote of 102 to 18 and the Senate on a vote of 42 to 7. HB 364 represents a 277% tax increase, one of the largest tax increases in the history of Mississippi. The tax increase is levied in addition to a 156% federal cigarette tax hike that went into effect on April 1st.
Although the rationale behind this tax increase was to fund increased car tag expenses, State Representative Sam C. Mims, (R-McComb) stated that “using the increased car tag expense as an issue to justify a tax increase is totally absurd. Car tags are only providing ‘political cover’ to those who support raising taxes.” There were other solutions. For example, Mississippi has a rainy day fund of $360 million that could be used finance the $30 million car tag increase.
State spending priorities should be funded through existing resources and with as broad of a base as possible. Raising taxes on a declining revenue sources like tobacco to fund state spending programs will eventually force legislators to raise other taxes in the coming years for additional revenue. Furthermore, when combined with the higher federal cigarette tax, the revenue from an increased state cigarette tax will decline even faster than projected.
ATR commends the following Taxpayer Protection Pledge signers who upheld their committment to their constituents by voting against this tax hike: Representative Larry Baker, Representative William Denny Jr., Representative Mark Formby, Representative Stephen Horne, Representative William W. Janus, Representative John Moore, Representative Billy Pigott, and Senator Lee Yancy.