House Committee Approves Cigarette Tax Increase Proposal

The House Ways and Means Committee voted to increase tobacco taxes from 32 cents a pack to 68 cents a pack. The committee vote was 11-5 and came after it was amended to reduce the overall amount of the tax increase. The amendments also create a special fund that dedicates the money to Medicaid and securing further Federal matching funds.

According to the Times-Picayune, here’s who voted for and against the tax hike:

VOTING TO INCREASE THE TAX: Joel Robideaux, Regina Barrow, Henry Burns, Michael Danahay, Taylor Barras, Thomas Willmott, Major Thibaut, Marcus Hunter, Chris Broadwater, Eddie Lambert, Harold Ritchie

VOTING AGAINST THE TAX: Chris Hazel, Robert Johnson, Lenar Whitney, Julie Stokes, Mickey Guillory

ABSENT: Patrick Williams, Richard Burford, Frank Hoffman

Jeremy Alford writes that the Jindal administration is holding firm to its own plans to close the budget gap.

As lawmakers work to cobble together the pieces of their budget-balancing plan, Gov. Bobby Jindal’s administration appears to be reserving judgment and holding onto the cornerstone bill from its own plan.

HB 366 by Rep. Bryan Adams, R-Gretna, includes Jindal’s proposal to make a set of refundable tax credits non-refundable. It was temporarily put on hold during today’s Ways and Means Committee.

Revenue Secretary Tim Barfield also told committee members that the administration would not be opposing any tax bills this early in the process. The governor is opposed to any net increase in taxes, but would endorse them if reductions of an equal amount are made elsewhere in the budget. Legislative leaders feel like they’re meeting the revenue neutrality rule by advancing an inventory tax repeal bill in the Senate, which would cut that particular tax by around $500 million.

Adding fuel to the fire, Commissioner of Administration Kristy Nichols wrote an op-ed in the Times-Picayune once again opposing tax increases.

Since repealing the Stelly plan in 2008, we’ve seen unprecedented growth in our economy and today have more people working than ever before. Raising taxes is not the answer.  Asking our citizens to subsidize business will not help our state.

Nichols though said the Jindal administration was open to “fee increases.”

I wrote last month that Louisiana should not raise the cigarette tax, I and stand by it. Cigarette taxes are a poor source of revenue.

But if the bill stays as is, especially with the money being allocated to health care, we can say it could’ve been worse. The increased cigarette tax revenue could’ve simply been deposited into the general fund to close a budget gap for this year. The problem with that is higher cigarette taxes cause people to quit smoking so the amount of revenue available decreases. It doesn’t take a genius to realize we would be back in the same financial situation again.



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