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Louisiana HB 63 Goes Up In Smoke

Harris Kenny
May 16, 2011, 7:00pm

Earlier today Louisiana HB 63 went up in smoke after it failed to pass out of the state‚??s House Ways and Means Committee. The wide-ranging tax increase bill essentially sought to increase taxes on all tobacco products by at least 50% by:

According to The Times-Picayune, HB 63 received strong criticism from a coalition of tea party groups, businesses and Governor Jindal himself. Rina Thomas, a Jindal aide, told the Committee earlier today that cigarette tax increases ‚??would be contrary to the work (policymakers have) done over the last three years (to cut taxes.)‚?Ě The bill‚??s sponsor (Rep. Ritchie) voluntarily deferred the bill after realizing he had ‚??nowhere near‚?Ě the seventy requisite votes to override Gov. Jindal‚??s veto.

Separately Rep. Ritchie sponsored HB 591, which would exclusively repeal the sunset clause for the temporary four-cent levy on cigarettes set to expire January 30, 2012, and passed out of the House Ways and Means Committee on a 10-5 vote. Gov. Jindal also opposes HB 591, arguing intervention by the legislature to repeal the sunset clause constitutes a tax increase.

Tobacco taxes are a convenient target. In fact they are often considered ‚??low hanging fruit‚?Ě because politicians increase taxes under the false pretense of good intentions. However increasing tobacco taxes won‚??t solve Louisiana‚??s budget deficit.

Gov. Jindal has the right idea here, and is pursuing effective governance over political convenience in addressing Louisiana‚??s $1.6 billion budget deficit. Gov. Jindal was recognized in Reason Foundation‚??s Annual Privatization Report 2010: State Government Privatization for being a national leader on innovative policy solutions. Below are some government reform highlights from Louisiana (including several proposed by the state‚??s Commission on Streamlining Government):

The Pelican State‚??s government downsizing efforts have prompted all three major credit rating agencies to upgrade Louisiana‚??s bond rating since 2009‚??at a time when other states have seen downgrades given their shaky fiscal health‚??and the agencies specifically cited the state‚??s focus on spending control and streamlining as influencing factors. A higher credit rating alone will save Louisiana taxpayers millions in avoided interest costs over time.

Rather than raise taxes, Louisiana policymakers should continue to focus on implementing recommendations from the state‚??s Commission on Streamlining Government. For more ideas, see the American Legislative Exchange Council‚??s State Budget Reform Toolkit, which contains a broad range of creative policy solutions.

Harris Kenny is Policy Analyst

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