Kansas: Tobacco, liquor tax-hike ideas bring feedback

Source: The Hutchinson News

By Mary Clarkin Staff

February 1, 2017

Gov. Sam Brownback’s call for a $1 tax hike on a pack of 20 cigarettes stands in the shadow of the tax hike favored by the health-care industry.

House Bill 2231, introduced Tuesday, seeks a $1.50 tax increase on a pack of cigarettes.

Tobacco is the No. 1 cause of preventable deaths and directly causes 4,400 deaths in Kansas a year, Dr. Roy Jensen, director of the University of Kansas Cancer Center, told the House Taxation Committee. The House bill also would create the Cigarette and Tobacco Cessation Fund.

The American Cancer Society, the American Lung Association and the National Multiple Sclerosis Society favor a high-tax increase, too. Brownback’s requested tax hike on other tobacco products – to go from 10 percent to 20 percent – drew more pushback from the tobacco industry and businesses than his proposed $1 tax hike on a pack of cigarettes.

Brownback also wants to raise the liquor-enforcement tax from 8 percent to 16 percent. That was roundly denounced by about 10 people offering testimony. No one spoke in favor of the liquor-tax increase.

Raising revenue

The governor’s three proposed tax hikes – cigarettes, other tobacco, and alcohol – would generate a combined additional $100 million in revenues in the fiscal year starting July 1.

Those testifying against higher taxes chiefly focused on the potential loss of sales to Missouri.

One Talk of the Town Grill & Bar in Johnson County is a mile from the Missouri border, a business partner noted.

“I would encourage you to oppose this alcohol tax enforcement increase because it targets my industry specifically and is broadly bad policy,” business partner Janez Lomshek wrote in testimony.

Legislators were warned that the shopper who crosses over to Missouri for one item will buy other things, too, in Missouri. Kansas could lose jobs and sales-tax revenue, legislators heard.

Kevin Timmons, a partner in Nick and Jake’s Restaurants located in Kansas and Missouri, said it’s a myth that the Johnson County consumer is unaware or unconcerned about value.

Another option when prices climb, said a lobbyist for the Cigar Association of America, is buying online.

Listening

House Taxation Committee Chairman Steven Johnson, R-Assaria, limited testimony to about 4 minutes per speaker. Committee members mostly listened.

“Our business is still young and working to become established. Our margins are thin,” said Emily Peterson, an owner of the 3-year-old Merchants Pub & Plate in Lawrence.

Jeremy Horn, owner and co-founder of Wichita Brewing Co., was among those pointing out that alcohol was “taxed at every level.”

“And if anything’s left over, we pay income tax,” Horn said.