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.