Missouri: Pitting Sin Tax Against Income Tax
- Sales Tax News
- 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.