Arkansas Passes 56-cent Tobacco Tax Hike

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Arkansas Passes 56-cent Tobacco Tax Hike

LITTLE ROCK, Ark. -- The Arkansas Senate approved raising cigarette taxes by 56 cents a pack, effective March 1. The office of Governor Mike Beebe is planning a signing ceremony, according to an Associated Press report.

Beebe proposed the $87.8 million tax increase as a way for to pay for health improvements statewide.

Arkansas' increase comes just weeks after a 62-cent-a-pack federal excise tax was signed into law.

State officials have said the Arkansas tax increase, when combined with federal matching dollars, would pay for nearly $180 million in expanded health programs.

"This bill ... will provide much needed revenue to put Arkansas on the course to save lives and make our health care system better for all Arkansans," said the bill's sponsor, Sen. Tracy Steele of North Little Rock. "There are few opportunities we have as public servants and legislators to actually save lives."

Among those voting in favor was Sen. Terry Smith, a Hot Springs Democrat who voted against the bill in committee but realized later it would pass the Senate. "I just wanted to be on the train," Smith said.

Only one senator rose to speak on the floor against the tax increase.

Sen. Johnny Key, R-Mountain Home, said the nation's worsening economy and the recently passed federal cigarette tax increase made it a bad time to raise the state tax.

"In this economic environment in our state and our nation, we're facing a tax increase at the federal level and now we want to put a tax increase at the state level," Key said. "I think it's the wrong time to do that."

When the increase takes effect next month, the state's cigarette tax will rise to $1.15 per pack, ranking 25th in the nation, according to the Campaign for Tobacco-Free Kids. The legislation would also raise the tax on other tobacco products -- such as cigars and pipe and chewing tobacco -- from 32 percent of the wholesale price to 68 percent.

In related news, the Senate also approved a bill to increase the alcohol permit fees for restaurants, liquor stores and wholesalers by a 33-1 vote. The Alcohol Beverage Control Division estimated the fees will raise an extra $1.2 million for the agency.

The proposed fee hikes include would raise the maximum cost for a wholesale beer permit from $1,000 to $5,000. A restaurant wine permit would go from $50 to $300.

The measure, which now heads to the House, also would allow businesses with permits for on-premises consumption of alcohol to operate between 10 a.m. and midnight, instead of between noon and 10 p.m.