On March 15, Gov. Haley Barbour vetoed a second tax reform bill that would have raised the cigarette tax to $1 per pack and cut the state's 7 percent sales tax to 3.5 percent.
Barbour vetoed an earlier version of the bill that would have phased out the grocery tax completely in six years, saying that new money from the cigarette tax could not replace the revenue towns and cities would lose with the elimination of the grocery tax.
Lt. Gov. Amy Tuck said last month that the tax swap was the morally proper thing to do, calling the grocery sales tax "regressive."
At a recent news conference, Barbour called the plan "irresponsible," at a time when the state faces financial uncertainly from damage caused by Hurricane Katrina.
The Mississippi Tax Commission took issue with Barbour's argument in the last bill, releasing figures that showed the cigarette tax would be more than adequate to replace lost revenue. This was only exacerbated in the new tax bill, SB 3084, which the Tax Commission reported would actually bring more money into the state's coffers. The commission says the bill would cut grocery tax revenues by $172.5 million in fiscal-year 2008, but increased cigarette taxes would bring in an additional $181.5 million that same year.
The second tax bill would have imposed a fee on cigarette manufacturers not already paying damages to the state as a result of a multi-million dollar suit against tobacco companies by former Attorney General Mike Moore. The tax commission estimated that those fees would have generated another $17 million in fiscal-year 2007 alone.
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