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GOP lawmakers say cigarette tax hike unnecessary

JOHN THOMPSON • Mar 31, 2007 at 12:09 PM

ELIZABETHTON - Three state legislators told members of the Elizabethton/Carter County Chamber of Commerce that the state is flush with revenue and there is no need for Gov. Phil Bredesen's proposed tax increase on cigarettes.

Lt. Gov. Ron Ramsey, state Sen. Rusty Crowe and state Rep. Kent Williams attended the Annual Legislative Breakfast and Forum at the Truman Clark Annex on Friday morning. U.S. Rep. David Davis could not attend. His field representative, Dean Reynolds, was there to answer questions about the federal government.

"We are talking of raising taxes at a time when money is coming into Nashville at an all-time high," Ramsey said. "Why do you raise taxes when revenue is coming in at an all-time high?"

He answered his question by saying the governor has fully funded everything else in his budget except for schools. The governor has proposed to add a 40 cent tax on cigarettes to fund education.

"It doesn't sound like schools first to me," Ramsey said, referring to the name of the governor's education initiative.

Crowe said the tax on cigarettes is the logical thing to tax because Tennessee now has one of the lowest tobacco taxes in the nation. If the increase were passed, Crowe said the tax on a pack of cigarettes sold in Tennessee would rise from 20 cents to 60 cents.

While Crowe thought it was the logical thing to tax, he did not think it was the logical time to enact the tax. He said the economy is in great shape this year, but leading economists have warned that there is a strong probability of a sharp national recession in the immediate future, perhaps as soon as next year. He felt that would be the time to tap new sources of revenue.

"We are in the midst of a great year," Crowe said. "We have $300 million, maybe $400 million in one-time money. We have $130 million in tobacco money, and we have $400 million, maybe $500 million in new growth. That is $1 billion for the governor to do whatever he wants to do. In my mind, to ask for a tax you don't need is not a smart thing to do."

Crowe had another argument for not funding education with cigarette revenue.

"Why would you want to attach our educational goals and dreams to a dying source of revenue? It doesn't make sense to me," Crowe said.

Williams saw a recent change in the governor's direction over the tax.

"We really don't know where it is going," Williams said. "The governor says it is negotiable now."

Williams, a restaurateur, also weighed in on another tobacco issue. He said the state restaurant association has come out in favor of a smoking ban in restaurants in the state, but only if the state does not discriminate. The associations calls for the legislators to support a smoking ban in workplaces.

In other matters, Ramsey told the business owners that the new Senate over which he presides is "very pro-business and pro-growth." He said the Senate recently won two battles against "very anti-growth bills." He said these bills would have allowed unionization of firefighters and established a state minimum wage.

Ramsey praised the performance of Crowe and Williams. He said he has been so impressed with Crowe's efforts through the years that once Ramsey became lieutenant governor he gave Crowe his choice of committee chairmanships.

Ramsey told the audience that "you forget (Williams) is a freshman, he has done so well."

The group fielded several questions from the audience, including one from businessman Charles Von Cannon, who asked if any of them "towed the party line" when former Gov. Don Sundquist sought to create a state income tax.

"That was a tough, tough time," Ramsey said. "There was a created crisis that started in 1999 when the governor decided he wanted a state income tax ... but we stuck to our guns. You don't have to worry about any of us (supporting an income tax)."

"I think I speak for all of us," Williams said. "We are not for any new taxes and never a state income tax."

Crowe said the state constitution prohibits an income tax, and the state Supreme Court voted unanimously on four occasions saying there can be no income tax unless the constitution is changed.

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