Smoke and Mirrors

The Mississippi House of Representatives Wednesday approved HB 364, a measure which would add 82 cents to the price of every pack of cigarettes, bringing the state’s total tax to $1.00 per pack. Frankly, I was mildly surprised that the bill passed. It’s not the first time I’ve misread the mood of the House floor, nor surely will it be the last.

There is broad bipartisan legislative support for raising cigarette taxes. Lt. Gov. Phil Bryant and the Senate leadership favor a hike, though likely not as much as the House approved, and Gov. Barbour’s own proposed budget assumes the inclusion of millions in new revenue to be derived from various tobacco tax adjustments. The only stumbling blocks that could prevent ultimate approval of a higher cig tax would be an irreconcilable disagreement over the amount of the increase, or an irresolvable dispute about how to spend the new revenue.

HB 364 was wisely crafted to finesse the second concern — the bill was “clean” with no diversion or earmarking language. The additional tax will simply go into the general fund, and will be spent through the normal appropriations process. So, while there certainly will be hard negotiations about whether to appropriate the new money for Medicaid, to defray education cuts, or to other priority areas, any budget impasse will not itself prevent the tax from taking effect. The McCoy House leadership was both smart and pragmatic in presenting a “clean” bill for floor consideration. Clearly their goal was to actually enact the legislation, and not just argue about it.

The amount of the increase, of course, was central to the House debate. Many members, myself included, worry that a levy as high as $1.00 per pack will put Mississippi’s tax seriously out of line with surrounding states, thereby inviting enforcement issues and bootlegging problems. Furthermore, especially considering that the U.S. Congress wants to increase the FEDERAL cigarette tax by 61 cents per pack, an additional 82 cents at the state level could well mean declining consumption and lower state revenues. (Although less smoking is a GOOD thing, proponents made clear that HB 364’s purpose is to generate tax revenue, not to discourage smoking. Ditto for the proposed Federal legislation).

Rep. Greg Snowden
Clarion Ledger
1/15/9

Rep. Greg Snowden
1/15/9