Keep Grocery Tax, Leave Cigarettes Alone, Governor Says

By Monisha Bansal | July 7, 2008 | 8:22 PM EDT

( - Following a second veto Wednesday of a bill that would raise the state tax on tobacco while cutting the grocery tax, Mississippi's Republican Gov. Haley Barbour is being called "big tobacco's best friend" by an anti-tobacco group. Barbour says the legislation would hurt cities and towns already reeling from Hurricane Katrina.

"Nowhere in America has a politician done so much to help the tobacco industry at the expense of the people who elected him," said Matthew L. Myers, president of Campaign for Tobacco- Free Kids.

Barbour is a former Washington lobbyist, whose firm was named the most powerful lobbying firm in the nation by Fortune Magazine in 2001. His clients included some of the nation's largest tobacco and pharmaceutical companies.

According to Myers, Barbour has "once again put the interests of his former big tobacco employers ahead of the interests of Mississippi's kids and families. In vetoing this legislation, Gov. Barbour has shown again that he is big tobacco's best friend.

"The governor has rejected what would be a win-win-win solution for Mississippi," Myers argued - "a health win that would reduce tobacco use and save lives, a financial win that would save Mississippi taxpayers money both by reducing tobacco-caused health care costs and their grocery taxes, and a political win that is popular with the voters."

Barbour initially vetoed the bill on Jan. 19, but the Mississippi Legislature brought back the measure. The bill would raise the state tobacco excise tax from 18 cents per pack of cigarettes to $1 by July 1, 2007, and also cut the grocery tax from 7 percent to 3.5 percent by the same date. According to the legislative language, the grocery tax would have been completely phased out by 2014.

Mississippi has the highest grocery tax in the country, but the third lowest tobacco excise tax. Ranging from seven cents in South Carolina to $2.46 in Rhode Island, the average pack of cigarettes in America carries 91.7 cents in state taxes and 39 cents in federal taxes.

Barbour says the simultaneous tobacco tax hike and grocery tax cut is not only the "wrong policy, it is being considered at the wrong time."

He called it "the latest attempt by the Legislature to change the state revenue stream in the middle of tremendous financial uncertainty in the wake of Hurricane Katrina." Democrats have narrow control of the Mississippi Senate, but a large advantage in the House.

"Despite the initial claims that this proposal is simple and revenue neutral, this bill in fact short-changes our towns and cities which are already strapped in post-Katrina times and destroys our ability to increase needed funding for education in the future," Barbour reportedly told the Jackson Free Press.

On Wednesday, Mississippi announced it had $200 million more in revenue than had been previously estimated.

Slashing the grocery tax, Barbour has argued, would reduce state revenue by $1.5 billion over the next nine years. "Any increased revenue from a higher tax on tobacco will not come close to offsetting the decreased revenue from reducing the grocery tax," he was quoted as saying.

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