State bill would raise cig­a­rette taxes to pay for tax cuts

Texarkana Gazette - - FRONT PAGE - By An­drew DeMillo

LIT­TLE ROCK—The Repub­li­can leader of the Arkansas Se­nate and a bi­par­ti­san group of law­mak­ers on Thurs­day pro­posed rais­ing taxes on cig­a­rettes and e-cig­a­rettes to pay for tax cuts for the state’s low- and mid­dle-in­come res­i­dents.

Flanked by more than a dozen law­mak­ers from both par­ties, Se­nate Pres­i­dent Jim Hen­dren de­tailed the $100 mil­lion plan that he says will go be­fore a leg­isla­tive com­mit­tee next week.

“Arkansas has a very re­gres­sive tax code. … The pur­pose of this leg­is­la­tion to­day is to be­gin to ad­just some of that,” Hen­dren said.

The pro­posal comes af­ter the ma­jor­ity-Repub­li­can Leg­is­la­ture last month backed GOP Gov. Asa Hutchin­son’s pro­posal to cut the state’s top in­come tax rate. Democrats com­plained that the ben­e­fits of the cut, which was passed and signed into law, were too heav­ily skewed to­ward the state’s high­est earn­ers.

The mea­sure un­veiled Thurs­day in­cludes a tax credit for low-in­come res­i­dents, which has long

been pushed by Democrats in the Leg­is­la­ture. It also cuts taxes for those mak­ing less than $22,000 a year. Un­der the pro­posal, the first $8,899 earned by those in that cat­e­gory won’t be sub­ject to in­come tax. Cur­rently, up to $4,499 for those in that cat­e­gory isn’t sub­ject to in­come tax. The pro­posal also raises the stan­dard de­duc­tion for tax­pay­ers from $2,000 to $3,300.

To pay for the cuts, the pro­posal im­poses a 20 per­cent ex­cise tax on cig­a­rettes, or 80 cents a pack. The pro­posal would also make e-cig­a­rettes sub­ject to the same taxes as tra­di­tional tax prod­ucts.

“This is good pol­icy. It’s go­ing to help Arkansans who are ad­dicted to tobacco prod­ucts and it’s go­ing to help Arkansans who will re­ceive the ben­e­fits of these tax re­lief mea­sures,” Demo­cratic Rep. Ni­cole Clowney, a co-spon­sor of the bill, said.

Since they’re con­sid­ered new taxes, the leg­is­la­tion only need a sim­ple ma­jor­ity rather than the three­fourths sup­port that tax in­creases usu­ally re­quire in the Leg­is­la­ture. Hen­dren’s pro­posal has 16 co-spon­sors in the Se­nate and 40 in the House.

Hutchin­son stopped short of say­ing whether he backs the leg­is­la­tion. Hen­dren said he didn’t ex­pect op­po­si­tion to the mea­sure from the gov­er­nor.

“It is im­por­tant that any ad­di­tional tax re­lief be off­set on the rev­enue side, which this bill seems to ac­com­plish through a new tax on tobacco and re­lated prod­ucts,” Hutchin­son, who is Hen­dren’s un­cle, said in a state­ment. “How­ever, I will con­tinue to study this bill and its rev­enue im­pact as it moves through the leg­isla­tive process.”

House Speaker Matthew Shep­herd, a Repub­li­can, also ex­pressed re­luc­tance about the bill and said he was still re­view­ing the plan.

Hen­dren said he was still wait­ing on a rev­enue im­pact state­ment on the pro­posal. Arkansas Ad­vo­cates for Chil­dren and Fam­i­lies, which has backed the state Earned In­come Tax Credit, said that pro­vi­sion would ben­e­fit more than 300,000 peo­ple.

AP Photo/An­drew DeMillo

■ Arkansas Se­nate Pres­i­dent Jim Hen­dren, cen­ter, speaks about a pro­posal to raise taxes on cig­a­rettes and e-cig­a­rettes to pay for tax cuts for low-and mid­dle-in­come res­i­dents Thurs­day at the state Capi­tol in Lit­tle Rock.

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