Tax commission supports raising cigarette taxes and giving communities the option to raise sales tax

The governor’s commission looking into revamping Kentucky’s tax code came to a consensus Monday on at least two more points: raising the cigarette tax and a local general sales tax option.

The group, which now has another month to put together it’s report on recommendations to change the tax code, is going through sales and business taxes in its all-day meeting Monday.

Sticking it to the Marlboro Man

In the morning, the group’s members agreed to recommend raising the taxes on cigarettes from 60 cents per pack to $1-per-pack and 40 cents on all other tobacco products. Currently products like tin can snuff is taxed at 15 cents.

“Which one of these products is good for you,” one commission member remarked while debating whether to add pipe and other tobacco products to the list.

The group’s members hope the increased cost of tobacco products will reduce the number of teen smokers and cancer related deaths in the Commonwealth.

Mayor’s know best

In the afternoon, the group found consensus on a local tax option. That would require amending the constitution, which would mean approval by three-fifths of each legislative chamber and the ratification of voters.

Under the local option plan, a mayor could propose a small tax to fund local projects – projects would be voted on through referendum.

Louisville Mayor Greg Fischer asked the commission to consider the option during their July public input meeting in Louisville.

However not all of the commission thought the idea had merit. Rep. Jim Wayne, D-Louisville, argued that any additional tax would be regressive and, “hurt a lot of people.”

Lt. Gov. Jerry Abramson said he has pushed for the option since 1993, and said if the people of the area don’t want the special project or the additional tax they would have the option to vote against it at the local level.

Special session bound?

When the group reconvenes in early December they will still need to consider what rate to apply to the income taxes, and will have to finalize their final recommendations.

Members debated whether to adopt a lower flat tax rate or a progressive, or tiered, tax rate during at an early November meeting. The group’s members said they are interested in lowering income taxes. The sticking point is getting the math to work at different rates. They agreed to table the discussion at their November 8th meeting. .

The commission will have until the end of December to finalize its report, but Gov. Steve Beshear said last week that it’s tough to pass something as complex as reforming the tax code in a 30-day session when other issues, such as state employee pension system reforms, need to be done. Plus, any measure dealing with revenue during the regular 30-day session in odd-numbered years requires approval of three-fifths of each chamber: 60 of the 100 House members and 23 of the 38 senators.