Lawmaker pushes cigarette tax; sellers warn of unintended consequence

Lawmaker pushes cigarette tax; sellers warn of unintended consequence

NEW ORLEANS, LA (WVUE) - A state lawmaker says a hike in the state's cigarette tax could bring in $250 to $300 million that could help fund higher education and health care.

But some tobacco sellers said Tuesday that it could end up hurting the state's financial position if it becomes law.

"It wouldn't be the highest in the country, Louisiana is the lowest in the area," said State Rep. Austin Badon, D-New Orleans.

Badon filed House Bill 148, saying it's a way to generate more revenue for the state as it faces a $1.6 billion deficit for the new fiscal year. Presently, the state levies a 36-cent tax on a pack of cigarettes.

Badon's bill would increase the tax to more than $1 and would also raise the tax on smokeless tobacco, or "snuff" from 20-percent of the invoice price to 40-percent.

Taxes would rise on some cigars, too.

"The cigars that we're going after are the cigars the cheap cigars that people buy at like the corner store. I'm not going after the expensive cigars that people utilize at the cigar bars," Badon said.

According to the Tax Foundation, New York has the highest cigarette tax at $4.35 a pack. Massachusetts charges $3.51 and Connecticut charges $3.40. Missouri has the lowest tax on cigarettes at 17-cents a pack. And closer to home, in Georgia the tax is a penny more than Louisiana, at $0.37.

"I looked at the surrounding states of Mississippi, Arkansas and Texas, and I raise the tax up to $1.41 per pack which is equivalent to our neighboring state of Texas," Badon said.

At the Tobacco Exchange in the French Quarter, staffers expressed concern about the possible impact on sales.

"They're used to buying a pack of cigarettes from $5.50 to $6 a pack, not including tax. The next time they come in, it's $7 or, you know, goes up a whole dollar in change, depending on what they do. And for some they say, 'I'll go somewhere else,' and we just lost a customer right there. Now they may not find it at a better price elsewhere," said Robert Grand, of Tobacco Exchange.

Badon said the higher tax would benefit colleges and universities, which have suffered major cutbacks over the years, as well as the State Department of Health and Hospitals.

Nate LeFever, who was taking a smoke break near the Tobacco Exchange, said even though he smokes, the idea of more money for higher education is a good thing. He said Louisiana's tax is among the lowest around.

"They're incredibly cheap here and there could definitely be more of a tax on them, especially if it's going to go toward something like education," LeFever said.

But those who rely on tobacco sales to make a profit say increasing the tax could actually hurt the state's bottom line in the long run.

"You tax something to death and then somebody might just decide to be done with it. Well, there goes your state revenue on top of that, so eventually it's going to become a defeating purpose," said Grand.

Badon believes having fewer smokers in the state will help to reduce what the state shells out for health care services.

"Which is a good thing because we still have to pay for the health care-related injuries and problems that tobacco causes down the line," Badon stated.

As part of his legislation, the Louisiana Healthy Living Fund would be created with funds from the higher tax. Seventy percent of the funds would go to higher education and 30-percent to DHH for smoking cessation.

The legislative session kicks off April 13.

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