16 Percent Tobacco Increase Moves in Assembly

May 6, 2003
Posted at: 1:49 p.m. CDT

LITTLE ROCK, Ark. -- The Joint Budget Committee moved quickly to send funding measures to the House and Senate. The panel yesterday advanced bills that would give dozens of state agencies spending authority for the two-year budget period that begins July first.

Earlier, in a 15-minute speech to a joint session of House and  Senate, Governor Huckabee urged legislators to focus on the target for new revenue rather than a particular method. Legislators have not reached a consensus on any of the various proposals to raise tobacco, sales or income taxes.

With a four-to-three vote, the Senate Revenue and Tax Committee endorsed a proposed 16 percent sales tax increase on tobacco products, to be collected at the wholesale level.

The bill would add about 50 cents to the price of a pack of cigarettes and raise about $90 million annually.

The House Revenue and Taxation Committee passed legislation that would place a seven percent surcharge on the state income tax to raise $93 million a year.

The committee also endorsed a bill combining a three percent income tax surcharge with a 25-cent per pack tax increase on cigarettes and a seven percent increase on other tobacco products, both at the wholesale level. That proposal would raise about $95 million a year.

The state is looking at a $200 million shortfall in its budget each of the next two years.

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