New York Wants to Increase Pipe Tobacco Taxes from 46 percent to 75 percent

ALBANY — After a Friday of furious budget activity, the Legislature returns to the Capitol today to vote on Gov. David Paterson’s latest provocative one-week budget extender — including a chunky tax hike on cigarettes and tobacco products as well as stepped-up tax enforcement on sales of tobacco products on Indian reservations.

Under the plan, the current tax on a pack of cigarettes will rise from $2.75 to $4.35. The tax on other tobacco products — such as cigars, chewing tobacco and pipe tobacco — will increase from 46 percent to 75 percent. The increases are scheduled to take effect Sept. 1 and raise $290 million annually, according to the Paterson administration; stepped-up enforcement on Indian sales is expected to collect $150 million more.

Over the weekend, forces on either side of the debate over smoking weighed in. Altria, the parent company of cigarette giant Philip Morris, released a packet of information arguing that the hike would be an unfair burden that would hurt consumers and retailers, and could lead to increased illegal trafficking.

The American Heart Association was one of several groups that came out in support of the boost: "The higher the better," said Julianne Hart, the state organization’s advocacy director.

The inclusion of the new taxes will make the extender harder to support for any of the three Republican senators who enabled last week’s emergency appropriation to pass over Democrat Ruben Diaz Sr.’s "no" vote. The extender’s defeat would lead to a broad government shutdown.

Sen. Hugh Farley, R-Schenectady, said last week that he wants to keep the state running, but would refuse to vote for anything that contains new taxes.

The Senate’s Democratic majority will also take up a series of budget bills dealing with government operation, transportation, environmental protection and other sectors. The bill were passed by the Assembly on Friday but lagged in the Senate due to the absences of several Democrats.

Paterson and legislators still have to tackle the thorniest portions of the budget: the state’s revenue plan and education funding.

The budget deadline for this fiscal year passed on April 1. Paterson said last week that if a final budget plan isn’t settled this week, he’ll put the remainder of his budget proposal into the extender to be passed on Monday, June 28.

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