Cigarette Tax Hike Modified, But Advances

Apr 28, 2015

The House Ways and Means Committee started working through several revenue-raising bills Monday, including one that would increase the cigarette tax.

There was the expected health related testimony.

“In Louisiana, more than 22 percent of adults and 12 percent of youth smoke cigarettes — the only product that, when used as directed, will kill half of all its users,” said Dr. Michael Johnson, director of Louisiana Tobacco-Free Living.

There were fiscal responsibility arguments.

“The current cigarette tax, the third-lowest in the country, brings in a little over a hundred million dollars a year,” said Louisiana Budget Project director Jan Moller. “But the cost to taxpayers of treating smoking-related illness in Louisiana is about $700-million a year.”

The original version of the bill proposed raising the state’s cigarette tax from the current 36-cents per pack to $1.54 — the national average. That would bring in about $240-million in new revenue.

Opponents argued fairness.

“This bill would make the total tax burden on a pack of cigarette 56-point-2 percent,” said Herb Hargraves, a buyer with the Cash Magic truck stop chain. “Consumers will pay more in taxes than they do for the actual product.”

HB 119 by Bogalusa Rep. Hal Ritchie was amended by committee chairman Joel Robideaux, increasing the cigarette tax by just 32 cents. That will make Louisiana’s cigarette tax match Mississippi’s, at a total of 68-cents per pack.

Then Gonzales Rep. Eddie Lambert offered an amendment, dedicating the new tax revenue to Medicaid.

“Then this 68-million can turn into 200-million,” Lambert said.

That was confirmed by legislative fiscal analyst Greg Albrecht, who noted, “You get about two additional federal dollars for every state dollar under the Medicaid program.”

Kenner Rep. Julie Stokes objected to dedicating the money.

“As a legislature, we have very few choices on how to solve this budget problem — which is created largely by dedications,” Stokes stated.

But the amendment to dedicate the tax hike was approved, 12-4. And the entire bill earned an 11-5 vote in favor.

It remains to be seen if Governor Jindal will support or oppose this. His budget proposal included the bigger tax increase, wanting the funds to be used to offset higher education fees through a refundable tax credit scheme.