From the Arkansas Statehouse...

Tobacco tax bill sails through committee.

In Cigarette Tax on 4 February 2009 at 1:28 pm

Advocates for an increased tobacco tax came one step closer to their goal today as the House Rules Committee unanimously passed HB1204. The bill could come before the full House for a vote as early as tomorrow.

The only person to speak against the measure was a cigarette wholesaler, who complained that the tax increase will place an unfair burden on his business. He said he would have to take out a large loan to pay for cigarette stamps, which distributors must purchase before they sell their stock.

But legislators disputed claims of undue hardship. They pointed to recent additions to the bill that would increase a state discount to distributors, and they argued that credit could be extended for the purchase of stamps.

“The bill has a 270% increase in allowance for wholesalers,” House Speaker Robbie Wills told the committee in his argument for the bill.

Rep. Wills also repeated earlier assertions that he has the votes needed to pass the measure through the house.

The current version of the bill has several changes from the original filing. Besides the wholesaler allowance, the new version alters the way chewing tobacco is taxed. The original allowed for a tax based either on manufacturer’s price or on weight, whichever was higher. The current version includes a tax on price only. At 68%, that rate is slightly higher than the 64% originally proposed. Also, the current bill no longer distinguishes between ‘moist snuff’ and other non-cigarette tobacco products.

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