Kentucky Considers Raising Cigarette Tax
- Sales Tax News
- Nov 21, 2012 | Gail Cole
It may soon cost smokers more to light up in the Bluegrass State. After months of deliberation, the Kentucky Blue Ribbon Commission on Tax Reform has recommended raising the cigarette tax to $1 per pack. Currently, the tax is 60 cents per pack.
If approved, the added tax would generate an estimated $120 million a year for Kentucky. Similar taxes are being considered for other tobacco products, such as snuff and chew. Kentucky increased the cigarette tax from 30 cents a pack in 2009.
Some health care advocates suggested a steeper increase, but others feared that raising the tax too much would ultimate lead to "a decrease in state revenue." Cigarette taxes in neighboring states vary:
- Indiana: $0.99 per pack
- Ohio: $1.25 per pack
- Tennessee: $0.62 per pack
- West Virginia: $0.55 per pack
The commission, which was appointed by Kentucky Governor Steve Beshear (D), decided against raising the state general sales tax from its current 6%. However, it recommended "pursuing a constitutional amendment that would allow cities to seek a local-option sales tax for limited periods of time." City officials have long requested a local-option sales tax, which would generate revenue to improve infrastructure. Some members of the commission are against allowing local-option sales taxes, "noting that sales taxes impact the poor disproportionately."
The final report from the Blue Ribbon Commission on Tax Reform is due December 15, 2012, and it is unknown when its recommendations will be presented to the state legislature.