Smoke ‘Em If You Got ‘Em

by Adam Lynch
Graphic courtesy of The Mellman Group
March 15, 2006

The Mississippi Legislature made a second attempt at tax reform this year, with the House's approval of Senate Bill 3084 on a 79 to 41 vote. The bill is an attempt at compromise after the last tax bill was vetoed by Gov. Haley Barbour.

That bill sought to eliminate the grocery tax, which at 7 percent is the nation's highest and most regressive. The bill also sought to raise the state's 18-cent-per-pack tax on cigarettes to $1 within six years.

Barbour, a former tobacco lobbyist, not only vetoed the bill, but waged a perception war, arguing that the tax cut would hurt cities and small towns across the state.

"Barbour's history as a 'no new taxes' governor certainly ran counter to his opinions on this particular tax cut," said Jim Carrington of Communities for a Clean Bill of Health, which supports the tobacco tax hike.

Lt. Gov. Amy Tuck championed the old tax bill, and asked the state tax commission to calculate whether or not cities would suffer under the reworked taxes.

Basing its calculations on annual growth over the last six years, the tax commission found that cities would suffer no fiscal damage. Barbour's office used the same set of figures, however, to predict great financial losses. Barbour's office did not reveal how exactly the governor projected such losses.

"We find that formula suspect," said Joseph Ammerman, public information spokesman for Tuck's office.

Enter the new bill last week. SB 3084 reduces the grocery tax by half, down to 3.5 percent, rather than the outright elimination the last bill contained.

Barbour sent a letter to legislators, calling even the reduced tax cut ill-timed.

"While you may consider the tax swap politically popular, I ask you to consider the revenue cut's (impact) on our ability to provide the services our citizens need," Barbour said in the letter, arguing that the state will already have to come up with millions of dollars to match federal aid for hurricane clean-up.

The State Tax Commission refuted Barbour's argument, depicting the "tax cut" as an actual tax hike. The bill would cut grocery tax revenues by $172.5 million in fiscal-year 2008, but bring in $181.5 million that same year. The bill would also impose a fee on non-settling cigarette manufacturers estimated to generate an extra $17 million in fiscal-year 2007.

Secretary of State Eric Clark said at a press conference last week that he personally wanted the tax bill to pass. "We have the highest tax on groceries in America, and we've got the next-to-the-lowest tax on tobacco in America, and this is a great bill," Clark said. "It's going to make it easier on our families to provide food and make it a discouragement to buy tobacco."

Rep. Steve Holland, D-Plantersville, said Barbour was out of touch with voters. "I'm going to say to you, Haley: If you can't sign the bill, let it become law without your signature, because the people of Mississippi have spoken as loudly on this as anything I've heard in my 23 years. Don't make a stupid political mistake," Holland demanded.

A recent poll commissioned by Communities for a Clean Bill of Health, and conducted by the Mellman Group of Washington, D.C., finds that Mississippians overwhelmingly support a hike in the cigarette tax.

The poll asked, "Would you favor or oppose an 82-cent per pack increase in the state cigarette tax as part of an effort to reduce tobacco use, particularly among kids, with the revenue dedicated toward reducing the state's 7-percent grocery tax?"

The poll found that 71 percent of Mississippi voters favored the tax, with 25 percent opposed and 4 percent undecided. The poll showed that even conservative Republicans favored the tax increase by 67 percent.

Barbour's office did not return calls for comment on the poll.

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