UPDATE – Talks drag for Miss. cig tax hike, deadline looms

Published 4:47 pm Tuesday, March 24, 2009

With the clock ticking toward a Wednesday deadline for compromise, Mississippi lawmakers still haven’t decided how much they might increase the cigarette tax.

The stalled negotiations are leaving budget writers uncertain about how much money the state might collect — and spend — in the fiscal year that begins July 1.

House and Senate negotiators met Monday and rejected each other’s latest offers.

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Mississippi’s current cigarette excise tax is 18 cents a pack. That’s the third-lowest in the nation, according to a national anti-smoking group, the Campaign for Tobacco-Free Kids.

The House on Monday proposed setting the rate at 90 cents a pack. That’s down from the only other House position of $1 a pack.

Senators rejected the 90 cents, and countered with an offer of 60 cents a pack. That’s up from the Senate’s original position of 49 cents and first negotiating offer of 55 cents.

House Ways and Means Committee Chairman Percy Watson, D-Hattiesburg, said the Senate offer is too low.

“We still feel that what you all are proposing does not produce enough revenue at a time the state general fund desperately needs additional revenue,” Watson said.

Senate Finance Committee Chairman Dean Kirby, R-Pearl, said some senators oppose a dramatic increase.

“I’ll be honest with you, I’m not sure we can pass 60 cents,” Kirby told Watson.

Wednesday night is the deadline for negotiators to reach final compromises on tax bills and budget bills for this legislative session.

Top lawmakers already want to suspend the deadline to give state and federal officials more time to evaluate how the federal stimulus package might affect Mississippi government. Legislators might leave the Capitol for a few weeks and return in May to finish writing a budget.

However, it’s unclear whether lawmakers want to suspend the deadline for revenue bills, such as the cigarette tax proposal. Suspending the deadline takes a two-thirds vote of the House and Senate, and some lawmakers believe there are enough cigarette-tax opponents to block a suspension of the revenue deadline.

With the current deadline in place, the cigarette tax increase will die if no compromise is reached by Wednesday night.

When Mississippi lawmakers started debating the issue in January, the average of the cigarette taxes in Louisiana, Arkansas, Tennessee and Alabama was about 49 cents a pack. That’s why the Mississippi Senate originally voted for that amount.

In the past few weeks, though, Arkansas has increased its cigarette tax from 59 cents a pack to $1.15. The new average for the four states surrounding Mississippi is nearly 64 cents a pack.

The federal cigarette tax also is increasing on April 1 from 39 cents a pack to $1.01.

Republican Gov. Haley Barbour has said lawmakers should be cautious in predicting how much money a state cigarette tax might generate because the federal tax increase could cause some people to stop smoking.

Barbour, a former tobacco lobbyist, is recommending an increase of 24 cents a pack for premium cigarettes and 43 cents a pack on cigarettes produced by companies that didn’t participate in the state’s 1997 settlement of a lawsuit against the tobacco industry.

The bill is House Bill 364.