Tobacco tax hike would hit hard

Convenience stores and tobacco shops bristled Wednesday at attempts to balance the state’s budget on their backs.

Proposals to increase taxes on cigarettes, tobacco and alcohol would hit convenience stores hard, said Thomas Palace, executive director of the Petroleum Marketers and Convenience Store Association of Kansas. As the Senate Taxation Committee considered hikes to the state’s cigarette and tobacco taxes Wednesday, he joked that he considered wearing a big bull’s-eye to the Capitol.

“Somewhere you are going to hit me — front, back,” he said. “I have protected my private area.”

Faced with a deepening budget shortfall that now exceeds $400 million, lawmakers are trying to find ways to close the gap. On Tuesday and Wednesday, the committee heard testimony on a bill that would raise the tax on cigarettes by 55 cents per pack to the national average of $1.34. It also would increase the tax on tobacco products, such as cigars and chewing tobacco, to 40 percent from 10 percent. The increased taxes could bring in an estimated $69.5 million in new tax dollars.

Committee Chairman Les Donovan, a Wichita Republican who owns a General Motors dealership, said he could commiserate when businesses are hit by factors beyond their control. Yet, he noted the dire budget problems.

“We have to do something on the revenue side,” he said. “We don’t know if we can cut enough more spending to get us out of here this year. If we can’t, we’re going to do something to raise some revenue some way to try to get us whole again.”

On Tuesday, supporters of the tax increase said it was necessary to help avoid dire cuts and would lower smoking among youths. On Wednesday, opponents said a tax increase would devastate their businesses.

“In my 30-plus years of observing and serving in the Kansas Legislature taxes have always been a popular topic,” said Doug Mays, a former Topeka lawmaker who spoke on behalf of the Cigar Association of America. “But in all that time, I can’t recall such stratospheric numbers being proposed in this bill.”

The tax increase, opponents said, would drive business online and to neighboring Missouri, which boasts the lowest tobacco tax in the nation. Brenda Ellsworth, operations officer for Pete’s convenience stores, said Kansas convenience stores also are disadvantaged by a higher gas tax and prohibition on selling strong beer and wine.

“Our state has provided wonderful roads for our customers to use while commuting to Missouri,” she said.

On Thursday, the committee is to begin talks on a 1 cent increase to the state’s sales tax. The committee is expected to take action on both issues by March 18.

By Barbara Hollingsworth, Cjonline
March 10, 2010

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