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IOWA TAX POLICY: MIXING CIGARETTES AND GASOLINE

January 04, 2007

Closer to home, the Iowa legislature looks like it will embrace its nicotine addiction by increasing its reliance on cigarette tax revenues:

Less than two weeks after (Governor-elect) Culver is sworn into office on Jan. 12, he must deliver a state budget of more than $5 billion to the Legislature. That budget "very likely" will call for an increase in the state's cigarette tax, Culver said.

"I said throughout the campaign that we should raise the cigarette tax," said Culver. "I've been very clear about that, and that's the only tax that I've talked about raising."

That's not the only tax his friends in the legislature are talking about, though. It looks like they'd like to raise gas taxes, too, but only if the legislative Republicans will jump over the cliff with them:

Another tax issue that could shove its way onto the Legislature's agenda is the state's gasoline tax. Transportation officials are projecting that gas tax collections in 2007 would decline by about $700,000, the first drop in 26 years.

That would slow job-producing highway programs, and the highway lobby is already gearing up to push for an increase. Murphy said there's only one way that would happen.

"If it doesn't get done in a bipartisan way, it doesn't get done," (incoming House Speaker) Murphy said.

The other legislative hot-item is a minimum wage increase, coupled with some sort of subsidy for health insurance. This will help small businesses by increasing their costs, but giving a little back with tax credits. What would business do without the legislature?

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