Cigarette tax hike may help budget, hurt stores

Published 9:04 am Wednesday, March 9, 2016

For the second time in a year, the governor of Louisiana is set to pass an additional cigarette tax.

Last year, then-Gov. Bobby Jindal passed a tax hike of 50 cents per pack. Last week the state Senate approved an additional 22-cent tax. Gov. John Bel Edwards said he will approve the tax, and if that happens it will become law April 1. In total, cigarette taxes will now stand at $1.08 per pack.

The new tax is expected to bring in $11 million in extra revenue for this fiscal year at a time when the state desperately needs extra funds to make ends meet. The state is currently facing a $900 million budget shortfall for this fiscal year and another $2 billion shortfall next fiscal year.

Over a whole year, the new cigarette tax is estimated to bring in $46 million.

This hike pushes Louisiana’s cigarette tax higher than Mississippi’s, which stands at 68 cents.

Over the past weekend, the Louisiana House of Representatives also approved modest hikes in alcohol taxes.

Liquor, sparkling wine, and wine with a low alcohol content would see taxes raised by less than 1 cent per fluid once and wine with a high alcohol content could see taxes bumped up by up to 2-cents. Beer taxes would be raised by less than 1 cent per bottle.

If the Senate and the governor approve these taxes, the state can expect to see an additional $4.4 million in revenue by June 30, the close of the fiscal year, and as much as $19 million over a whole fiscal year.

If these taxes pass, they could mean that liquor, wine and beer in Louisiana is slightly more expensive than in Mississippi. For instance, liquor would be about 10 cents more per gallon in this state, while sparking wine and champagne would be about 68 cents more expensive per gallon in Louisiana.

These taxes are in addition to a 1-cent sales tax for goods besides food and medicine.

At last week’s city council meeting, Bogalusa Mayor Wendy Perrette said city sales tax figures were flagging for the past two months, and she hoped an increase in sales taxes won’t drive shoppers over the border into Mississippi. Cities depend heavily on sales tax revenues to meet their annual budgets.

Besides the city, local convenience store owners could feel a pinch, too. Savi Kriti Gray, the owner of the Liberty gas station on Louisiana Highway 10, one of the last gas stations before crossing the bridge into Mississippi, said she is afraid her customer base will drive the extra few miles to save some money.

“I don’t think the customers will like it,” she said of the new tax.

Tami Burnett, a smoker, said she would cross state lines if cigarettes are cheaper somewhere else.

“I have no problem doing that, ‘cause it’s right over the bridge,” she said.

But not everyone will necessarily shop elsewhere. Another customer, Evanda Jefferson, said she only spends $7 a week on cigarettes, so a bit more tax wouldn’t push her to Mississippi. She said so far she’s saving money by staying in state, so she doesn’t know what the tax could do to the balance.

“They’re higher in Mississippi than they are here,” she said, of her preferred Newport brand.

Gray pointed out that if customers want cigarettes and snacks and drinks, they’re likely to buy all those things at once — and that means if people drive to Mississippi for cheaper cigarettes, then her store will lose more than just the cigarette revenue.

“Everyone wants to stop at one place and buy everything at once,” she said.

However, considering Pearl River County is a dry county, citizens will not be able to cross a bridge to buy cheaper liquor.