Published: April 19, 2008 12:11 am      

Hitt discusses governor's tax study commission

Local leaders disagree over cigarette tax

Earlier this year, Gov. Haley Barbour appointed community leaders throughout the state to a Blue Ribbon Commission to study the tax code in Mississippi, making recommendations to him about possible changes in tax law. Barbour has said that he wants the commission to look at all possibilites in tax reform.

One of the members of the commission is Lauderdale County District 3 Supervisor Craig Hitt, and having a local on an advisory board to the governor has caused some area leaders to be rather vocal about what they would like Hitt to bring to the table.

Hitt said in a telephone interview Tuesday that Barbour has mentioned the cigarette tax issue, saying: "He's already made comments to us at our last meeting that the issue will come up again."

Human Relations Commission Director Dr. Kathy Baxter and Ward 1 City Councilman Dr. George Thomas were vocal in expressing their opinions on the cigarette tax issue to Hitt at last Monday's Council of Governments meeting.

Baxter, who supports an increased tax on cigarettes, said she has heard from many community members who would like to organize in support of the tax, and that she advised them to wait until they could get some idea of what the commission would advise on the issue, asking Hitt to support the tax.

Thomas was against an increased cigarette tax, saying that increasing the tax would be discriminatory on the part of the government. Baxter said that it would be no different than the alcohol tax, and that the current cigarette tax is lower than the general sales tax. The cigarette tax is 18 cents a pack, with most packs of cigarettes priced at around three dollars.

The views expressed by Thomas and Baxter mirror those of many Mississippi residents, some of whom feel that an increased tax on cigarettes would be an ideal way to solve funding issues, while many





others feel that an increased tax would be tantamount to the government punishing smokers.

Hitt said Tuesday, "I really wouldn't say for or against (increasing the cigarette tax) at this point," but indicated at Monday's COG meeting that he was leaning slightly toward Thomas' view of the issue.

In 2002, nine states had a lower cigarette excise tax than Mississippi. Many of them were states,

as North Carolina, for whom the tobacco industry is a large part of the economy, and whose cigarette excise tax was less than 1 cent.

In 2008, only two states have a cigarette excise tax lower than that of Mississippi — South Carolina is the lowest, with a tax of only 7 cents per pack. In Missouri, the tax is 17 cents per pack, 1 cent lower than in Mississippi, but Missouri cities and counties are allowed to add an additional tax of up to four cents to each pack. In Mississippi, local governments are not given this option.

In 2006, Barbour vetoed Senate Bill 3084, which would have increased the cigarette excise tax and reduced the tax on groceries.

Hitt stressed that a possible change in the cigarette excise tax would only be a small part of the tax study commission's research, and that they are looking at possible ways of re-vamping all aspects of state tax law, and added: "We haven't really talked specifically about any different areas at this point."

Hitt said that at its previous meeting the commission engaged in research and fact-finding about the background of tax law and the tax laws in other states, and that he expects them to do the same at their next meeting. He doesn't believe they will begin constructing proposals until their third meeting.

He said that one area that will be of interest is whether to allow an optional sales tax for local governments, and said that "our statewide sales tax is certainly in line, probably in a medium with other states."

Barbour said in a written statement sent to The Meridian Star that the commission is "designed to take a comprehensive — not piecemeal — approach to tax reform by studying how federal, state, and local tax structures affect Mississippi citizens and businesses."

He added in the same statement: "I hope the Tax Study Commission will work to identify our system's strengths and weaknesses, while ensuring that everybody pays his or her fair share; that the effect is pro-growth and pro-job creation; and that it generates sufficient revenue to fund state government at necessary, appropriate levels. It is important for our state to modernize the system."

Barbour also said that he wants the commission to consider federal and local taxes, saying that he felt studies which did not took a "piecemeal" approach, adding: "These studies often report low income residents pay a higher share of their income as taxes, and that higher income residents pay too small a portion of their income in taxes. While this may be true when one looks only at the state system, all Mississippi taxpayers are also subject to federal and local taxes."

He mentioned his 2006 veto of the cigarette excise tax/grocery tax swap, saying that he did so because not enough is known about how a decrease in grocery tax would affect state revenue.

"I have suggested that the commission review the effects of a large increase both on usage and on consumers' willingness to go to the next state to purchase cigarettes," Barbour said.

The commission is scheduled to present recommendations to the governor and to the Legislature in August.