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Missouri: Pitting Sin Tax Against Income Tax

  • Jan 12, 2012 | Susan McLain

A year ago, a Kansas City Star editorial stated that “…Missouri has parked itself in the nation’s ashtray.”

The complaint was that “by refusing to increase the state’s lowest-in-the-nation cigarette tax, elected officials do more than create a gaping hole in the budget.” Commonly called a “sin tax,” a low cigarette tax is seen as damaging the state’s economy by encouraging residents to take up the habit of smoking, which promotes loss of worker productivity and increases the cost of health care borne by the state and federal government.

Missouri’s cigarette tax is lower than any other state in the nation. And their percentage of adult smokers is also, coincidentally, the highest in the nation, according to the Centers for Disease Control (CDC). The second lowest state, Virginia, a tobacco industry state, charges 30 cents a pack tax, while Missouri charges a “…rock-bottom 17 cents a pack in state taxes.” The Star editorial called for the state leaders to “step up” and bring the cigarette tax in line with the national average.

In the past, “…efforts to boost cigarette taxes [have been] repeatedly shot down.” A definitive increase requires voter approval by law. Representative Mary Still (D – Columbia), would like to set in motion a “…bill that would hike the tax by 12 cents each year for eight years” in order to avoid the negative responses from voters in the past who have voted down any increase in cigarette (and beer) taxes. However, “Republican state Senator John Lamping, of Ladue, has filed legislation that would exempt anyone earning less than $2,000 from having to pay state income tax and slightly lower the taxes for people earning more than that.” In order to offset that reduction in income tax revenues, his bill (SB 638) proposes “…increasing the cigarette tax to 43 cents per pack.”

According to several reports, this debate has been a Republican - Democrat debate with the former against any hike in sin taxes and the latter striving to enact sin tax hikes. However, this session, it looks like the former has jumped the gun on the latter to introduce a bill increasing the tax. Either way, it looks like both parties are now on the bandwagon to propose an increase in the lowest sin tax in the country.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Susan McLain
Avalara Author Susan McLain
Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”