Gov. Haley Barbour must flip only three Senate votes to sustain his veto of a statewide grocery and cigarette tax bill.
Senate Bill 2310, which would phase out the grocery tax and increase the cigarette tax, had previously passed both chambers of the Mississippi Legislature by more than two-thirds majority.
Barbour said he thinks eliminating the grocery tax would hurt individual towns and cities, especially those still ravaged from Katrina.
“It’s irresponsible to cut Mississippi’s budget revenue while we’re trying to recover from Hurricane Katrina, but this bill does that,” Barbour said in a news conference.
Barbour said he believes the bill will end up costing the state millions of dollars a year even though supporters claim Senate Bill 2310 is revenue neutral, meaning that it would not incur enough of a surplus or deficit to be sufficient.
“We need more funding for education and other priorities, not less,” Barbour said during the conference. “We need budget stability, not risk.”
Sen. Gary Jackson, a Republican from the 15th District, said he thinks that when people save more, they put more into the economy.
“This bill is pure and simple Reaganomics, you know, when you take the money out of government and put it in the hands of the people,” Jackson said. “I voted for the bill, and I support it completely.”
“I don’t know what the table will show eventually in 2014, but if the state would be out $33 million, it’s not a big number,” MSU political science and public administration professor Ed Clynch said. “It’s not an overwhelming amount.”
The bill causing so much controversy is actually a combination tax cut/tax increase, cutting the state’s grocery sales tax completely in eight years and increasing cigarette taxes by more than 300 percent this year.
Officials say Mississippi has the highest state grocery tax in the nation at 7 percent.
Senate Bill 2310 would reduce the tax by half starting July 1, gradually tapering it off by less than one percent each year until 2014, where it would be cut completely. Customers would still pay sales tax on alcohol, shampoo and other items sold at grocery stores.
Mississippi also has the second-lowest cigarette tax in America at 18 cents per pack. This bill would increase that excise tax to 75 cents per pack on July 1 and $1 per pack next year. More than half a million smokers would be affected by the tax.
Grocery sales taxes made up $365 million in revenue last year, according to the State Tax Commission.
Estimated revenues from the cigarette tax would be a combined $332 million, according to Tobaccofreekids.org.
This means that, should other factors remain constant, once the grocery tax is phased out completely in eight years, the government would begin incurring a $33 million deficit every year thereafter. If cigarette sales fell as a result of the increased price per pack, that deficit would grow even more.
There are two issues to consider when looking at the context of the bill, Clynch said. The first is that though the tobacco tax could be substituted for the grocery tax initially, the tobacco tax would shrink as fewer people smoke.
“Another issue has to do with cities. They get one cent of the sales tax collected within their boundaries. Cities are afraid that they’re going to be the losers and not recoup this,” Clynch said. “This is especially true in small towns, where grocery stores are a major source of revenue.”
Both the Senate and the House need two-thirds majority to override the governor’s veto. Lawmakers have no deadline to comply, however, and the Senate is unlikely to attempt an override until they can gain enough votes for it to pass.
“It doesn’t look like the governor’s veto will be challenged,” Clynch said. “If the Senate had enough votes to override, they would have made that known by now.”