La. talks charging more tax per pack

Cigarette smokers could pay more to puff if Gov. Bobby Jindal’s tax package succeeds in the upcoming legislative session.

Aides confirmed Wednesday that the governor is looking at what neighboring states charge in tobacco taxes and is considering putting Louisiana more in line with its neighbors.

At 36 cents per pack of cigarettes, Louisiana’s state sales tax is among the lowest in the region. Alabama only charges a few cents more in sales tax for a pack of 20 cigarettes. Texas and Arkansas charge more than a dollar in state sales tax.

Just two years ago, the governor opposed a 70-cent hike in the state sales tax on a pack of cigarettes. He also vetoed a 4-cent cigarette tax renewal, characterizing it as a tax increase.

Now, with the task of replacing nearly $3 billion in state revenue that would vanish through his push to eliminate the state personal income and corporate taxes, Jindal is changing course.

“We’ve always said that we would be fine (with) it if it was done in a revenue-neutral way, and we are willing to consider this and other changes as part of a larger effort to eliminate the income tax in a revenue-neutral way,” the governor said in a prepared statement.

In the fiscal year that ended June 30, the tobacco tax generated $136 million in revenue, a nearly 5 percent decrease from the previous state budget year.

Exactly how high of an increase the governor favors is unclear.

“Research is ongoing regarding a reasonable tax rate and how it might effect a change of behavior,” Douglas Baker, communications director for the state Department of Revenue, said by email.

Andrew Muhl, government relations director for the American Cancer Society of Louisiana, said he favors a $1-per-pack increase with the money dedicated to tobacco prevention and cessation and other health care-related expenses.

He said he is pleased the governor is considering any increase.

“Tobacco tax increases are one of the most effective ways to reduce smoking and other tobacco use, especially among kids,” Muhl said.

In the past, retailers lined up against any increase in tobacco taxes.

Dawn Johnson, executive director of the Louisiana Retailers Association, said Wednesday that she wants to see the governor’s tax package before commenting on its contents.

State Rep. Harold Ritchie, who proposed the 70-cent hike the governor opposed two years ago, said he will file his own tobacco tax increase proposal, regardless of what Jindal offers.

Ritchie, D-Bogalusa, said he smokes one to two packs of cigarettes a day. Had the price of cigarettes been higher when he was a teen, he said he might not be a smoker today. He said he wants to raise the per-pack tax by more than a dollar.

Details of what the governor is considering are emerging as his aides sit down with legislators to flesh out the package.

The Jindal administration wants to eliminate personal income and corporate taxes in a revenue-neutral fashion, probably with a state sales tax hike replacing at least some of the lost revenue. The governor wants to keep intact economic development incentives, which means dollars will have to be gathered to pay for them.

A Baton Rouge-based research group established a tax advisory group in November to look at tax policy. Although the work by the Public Affairs Research Council’s Tax Advisory Group is not complete, the organization released recommendations that found some consensus support.

They include centralizing sales and use tax collections and possibly broadening and expanding sales taxes, according to a press release. The group also encouraged the governor to lessen the impact on low income individuals and families if sales taxes are increased. The group noted that the state’s personal income tax revenue is expected to grow at a higher rate than sales tax revenue in future years.

Comments

1) Comment by ABayouBoy - 18/01/2013

Amen Bouncer.

2) Comment by Bouncer - 18/01/2013

My "vice" doesn't make me and my clothes stink, make my car stink, make my home stink, make my breath stink, yellow my teeth, clog my lungs with tar, and taint the air that others breathe. Smoking is a NASTY habit, and smokers are NASTY people. Period, end of story. I will happily pay more taxes on one of my "vices" (like Lifesavers Wint-o-green Mints).

3) Comment by CAJUNSC - 17/01/2013

You have your vice and I have mine. Let's tax something that you like for a change.

4) Comment by Bouncer - 17/01/2013

Tax gooood. Cigarette baaaad.

5) Comment by RODEO CLOWN - 17/01/2013

I was also dismayed by Jindal's opposition to the 4 cent excise tax RENEWAL last year. Especially when less than a month later, T-Bobby fought against exempting bottle water from sales tax. After all, we can live without cigarettes, water is a different case entirely. Granted, the current Louisiana excise tax on cigarettes could be easily doubled, if not tripled, the current $ 0.36 cents a pack-Texas' excise tax is $1.41 per pack, Arkansas' excise tax is $1.15 per pack, Mississippi's excise tax is $0.68. I, a smoker, would favor such an increase ONLY if the increase tax-the entire increase-were DEDICATED to the support and maintenance of charity hospital system in Louisiana. Theoretically, because this is a straight line extrapolation ignoring the price elasticity of demand, a $0.72 cents a pack increase may produce as much as $242 million dollars in additional state revenue.

6) Comment by slye753 - 17/01/2013

Smokers cost us untold dollars in health care. Beat up on Bobby, but you have to admit that truth. Myself and millions have quit, why can't you. Quit buying cigarettes and show Bobby yo are not going to pay that tax. I dare you to do it

7) Comment by Tea_Slayer - 17/01/2013

phil, that's the best piece of satire I have read in a while. Thanks for the chuckle...

8) Comment by mcBR - 17/01/2013

Wow, Phil! What an incredibly well-reasoned argument you've made! I'm convinced! NO TAXES EVER! ICE CREAM EVERYDAY FOR BREAKFAST!

9) Comment by phil - 17/01/2013

Maybe we could tax sex like we tax cigarettes. Everyone will then quit having immoral sex outside of marriage, and the costs of raising unwanted children, abortions, the spread of AIDS etc will also go down, so LA could save a lot of money. All they would need to do is to move the cameras from the streets to inside the houses. See how easy this tax issue is. Ok so this is just another dumb idea, but I have see worse ones proposed lately. Smile, big brother is watching.

10) Comment by mcBR - 17/01/2013

By the way, it should be added that the external costs to cigarette smokers -- costs they do not realize and the public picks up the tab for -- are an even better argument for the cigarette tax than paternalism.

11) Comment by mcBR - 17/01/2013

As many have pointed out, this is a huge flip flop for Bobby. He actually had the head of Health and Hospitals come out on the radio an explain why renewing the cigarette tax was not a good idea for Louisiana. UNBELIEVABLE. Dr. Naci Mocan, an economist at our own LSU, has done research which shows that increased cigarette prices has a significant impact in reducing not just the number of smokers, but the number of cigarettes that people smoke (nearly as important). In other words, when a pack costs $8, people will smoke half as many cigarettes.

12) Comment by CAJUNSC - 17/01/2013

DMJ it's called political gain. Whatever is best for him is where he will go. It's called the 2016 Republican Presidential Nomination.

13) Comment by DMJ - 17/01/2013

So NOW Jindal is in favor of the cigarette tax? Does this guy stand for anythign, other than the success of Bobby Jindal?

14) Comment by Pakistani - 17/01/2013

Pakistani boy is a flip-flopper.

15) Comment by CAJUNSC - 17/01/2013

Well put foldgers. Yes, I am a smoker. Not proud of it but I am. I would like to see them put a heavy tax on something that "tradewins" likes to enjoy. And by the way, I still buy my cigarettes online so I don't pay any state tax at all. The state is losing a lot of revenue with their "sin" taxes.

16) Comment by tradewinns - 17/01/2013

tax on cigarettes is good both from a revenue increase and a health factor. known as cancer sticks, taxing them will reduce smoking and hopefully reduce everyone's health care cost. yea, you can throw in saves lives if you'd like. anyone CAN QUIT smoking, they have to decide they want to do so. if you decide you prefer to smoke instead of eat, it's just a matter of time and you will leave this world and it will be quicker than by cancer. smokers should not be allowed to participate in any welfare program. there is no inducement to quit if your needs are met by others. (unemployment is not a welfare program- the prior employers pay this) increased cost (hopefully by a lot) will also decrease the number of kids who start smoking every year (day actually). if they don't begin, they do not have to worry about quitting. increase tax by at least $5 a pack.

17) Comment by foldgers - 17/01/2013

CAJUNSC, I agree. I am not addicted to smoking, but it is sad that government feels the need to tax those who are. Whereas those "addicted" to golf or buying $300 t-shirts or $500,000 cars are left alone. I think Monolpoly had it right, we should have a luxury tax I feel if we are allowed to have sin taxes. Now, in my opinion, what would bring in MUCH more revenue is to legalize sports gambling in this state. When will government learn? You make something illegal or tax it too much, people will still do it or get it illegally. NY is having huge issues with black market cigarettes because of their super high taxes. Now, make sports betting legal and regulate/tax it, the government would have much more revenue. It would put illegal bookies out of business, it would tax the winnings of the gamblers and it would take something that many people to daily out of the dark shadows. We can go into a casino and bet on cards, slots or dice. We can go to a horse track or even an off track place and bet on horse races. But for some reason, we can't bet on a football game. There is so much lost revenue by not taxing the winnings of gamblers an the winnings of the bookies. Just saying

18) Comment by CAJUNSC - 17/01/2013

If all the smokers quit, then where would the state get the additional revenue from? Be satisfied with what you are getting or you may not have anything at all.

19) Comment by CAJUNSC - 17/01/2013

There should not be a tax increase on one item only. Tax across the board. Don't pick on one item just because some people call it a "sin". Let's put a $5.00 per hole luxury tax on golf !!!

20) Comment by RUSerious - 17/01/2013

Anyone who thinks our thoughtful government increases sin taxes to curb our sins is naive. On both state and federal levels the excise taxes on cigs pay a large portion of health care benefits. I understand smoking also eats dollars but not the way it gives them. It is easy to tax smokers because most cannot quit, sad our government takes advantage of an addiction. I used to be a 2 pack a day smoker so I understand how hard it is to quit. I wish all smokers would quit and then we could see how we balance a budget.

21) Comment by crabby - 17/01/2013

What we are seeing is Boobie admitting he made a mistake. His misguided attempt to be the uber-republican in order to gain the white house isn't working out. I thought he was going to destroy this state to realize his dream . . . it looks instead like he's just going to cripple us badly.

22) Comment by swinham - 17/01/2013

Wow. As Gary points out, the governor wouldn't support a RENEWAL of a tobacco tax, but he will support an increase as long as it fits into his overall "revenue neutral" scheme - 3 card Monte, anyone? 8point6 makes a good point, albeit sarcastically. Evidence is clear tobacco taxes are regressive, so that part fits with the rest of the governor's package. It's easy to say, "the poor should just quit", but nicotine being the kind of addictive drug it is, the more problems you have, the harder it is to quit. Upping the tax on cigarettes reduces overall consumption up to a point, but we seem to have pretty much reached that point.

23) Comment by Mygulfbleedsforu - 17/01/2013

I was having some trouble understanding this ... Louisiana having the lowest sales tax in the region? But just on cigarettes? So I googled and found out this isn't a sales tax at all; it's an excise tax and then there is a sales tax on top of that. This tobacco tax is a flat amount, and no matter how much prices go up on cigarettes, the tax per pack stays the same. I dunno ... I just don't think a budget should be based on this sort of thing. Probably as time goes by the smokers will die out. We all hope the next generations will not smoke like the past ones did, at least not on into adulthood. Most probably will not. Seems any revenues received from tobacco should be considered unstable for the future. Besides, surely any increase in the cost of cigarettes will displace money that the consumer had been spending on other sales taxable items.

24) Comment by 8point6 - 17/01/2013

This increase will be a hardship on the po people who smoke. Especially, the ones who frequent the casinos.

25) Comment by jeffsadow - 17/01/2013

@elderlyman, LA does all of what you wrote, through its corporate, franchise, and property taxes, where the only change that is in your list would be repealing some property tax exemptions (in fact, at the local level they will be easier to get now consequence of a constitutional amendment passed last year). Jindal's plan would remove the corporate and franchise taxes. Rep. Ritchie is sure one weak- willed guy, begging government to be his nanny and stopping him from trying to satisfy his own cravings, when all it takes is a little personal responsibility and willpower. Instead, he'd rather have government have more control of everybody's lives just because he can't get it together.

26) Comment by thedudeabides - 17/01/2013

if marijuana were legal he could tax that as well.

27) Comment by Elderly Man - 17/01/2013

Why do we not tax corporations and businesses operating in Louisiana? Impose property taxes, repeal special tax breaks, set minimum rates on all but the smaller operations (doing less than five million a year gross income) as a beginning. Eliminate sales taxes on private individuals but raise them for corporations.

28) Comment by gary - 17/01/2013

Whoa. can we all get a "flip flop" for our governor?