Sen. Jim Hendren by a single vote won Senate approval of is proposal to deliver a $100 million income tax cut to lower income people to be financed by an increase in tobacco taxes. The vote was 18-14, with three not voting.
He emphasized this was not a tax increase because the increase in tobacco taxes is offset by $100 million in cuts in income tax, including an earned income tax credit for the poorest taxpayers. It’s done in a way to lessen the burden on lower-income people, disproportionately hit by a high sales tax in a state with a low property tax that tends to help higher income people more.
He sounded almost like a Democrat defending the earned income tax credit. He spoke of a single mom making $19,000 a year to support two kids. Shes paying sales and property tax, paying rent, paying an increased gas tax.
“That $420 change in her life situation doesn’t sound like a whole lot to many, but to someone making $300 to $400 a week that’s a whole lot.”
He noted too that you have to be working and have to have children to be in line for refunds under this bill. “I can promise you it will cost taxpayers a whole lot more than $77 if she doesn’t work.”
He acknowledged the tobacco tax would have an impact on a poor smoker, perhaps enough to offset income tax gains.
Without passage of this bill, there’ll still be no tax on vaping, subject currently only to a general sales tax. He’s heard from people who claim vaping is “healthy” or a “smoking cessation” product. But he said school officials have said vaping has become a “crisis” in schools.
The bill infringes on no rights, but it helps low-income people paying a heavy burden from the health costs of tobacco use.
Sen. Trent Garner continued his opposition to the bill. He questioned the accuracy of the state fiscal impact report. He spoke loudly for poor smokers who have no extra money and could face a dollar a day increase in smoking taxes. “You know how many bait shops are going to shut down immediately after this becomes law.” He said people will drive to neighboring states to buy cigarettes, to the harm of Arkansas businesses.
If the problem is health costs, Garner suggested making smokers pay for their Medicaid coverage.
Sen. Bob Ballinger said he didn’t know about the effects of vaping, but he was sure about the cost of cheeseburgers and soda pop on Medicaid. “Why aren’t we taxing cheeseburgers and potato chips?”
Sen. Missy Irvin spoke for the bill, warning of the dangers of heavy use of vaping by young people. “When this is happening with our teenagers we’ve got to address that.”
Hendren said it was “ludicrous” to compare the impact of cheeseburgers with cancer-causing tobacco. “We need to do something.”
The bill passed 18-14, with three
The bill increases the standard income tax deduction from $2,200 to $3,300; exempts income up to $8,899 from all income taxes and grants an earned income tax credit up to 5 percent of the federal credit. The tobacco tax would increase by 20 percent on the retail price and a 67 percent tax would be placed on vaping products.
The fight is expected to be even harder in the House, where Hendren has 40 sponsors of the 100-member body.