SHERIDAN — The Joint Interim Revenue Committee last week approved several key bill proposals, one proposing a tax increase on tobacco products and the other proposing a tax increase on state profit from liquor and wine. The proposals will now be introduced when the Legislature meets beginning Feb. 12.
The committee pushed back voting on several major bills — a sales tax for school construction, an increase in property taxes, a leisure and hospitality tax and a sales tax for specified services — until Jan. 31 because it is waiting for official recommendations from the Select Committee on School Finance Recalibration and a revenue update from the Consensus Revenue Estimating Group. The revenue estimates will be released in mid-January, and the recalibration committee plans to meet Jan. 29 and 30.
Many other bills did not pass. A proposal to add a one-cent tax on beer bottles, wine and liquor failed, and a proposed beer tax didn’t pass. A bill that would allow towns and municipalities to implement local taxes also failed.
The tobacco tax proposal, if approved by the Legislature, would increase tax on a pack of cigarettes from $0.60 to $1.60 and generate approximately $29.6 million in revenue per year. Madden said he voted in favor of the bill with the intention of bringing an amendment forward that would lessen the tax increase from $1 to $0.30.
Kinskey voted against it and called the proposal a regressive tax focused on lower-income citizens.
“It’s just kind of a vote to punish poor people that are hooked,” he said.
Mark Larson, executive vice president of the Colorado Wyoming Petroleum Marketers Association, said a 157 percent tax on a legal product is far too high and does not align with Wyoming’s core values. Larson also said the Labor, Health & Social Services Committee should handle the issue, not the revenue committee.
Larson expressed doubt about the state meeting the $29.6 million annual estimate. Historically, Larson said, significant tax increases on products like tobacco lead to a short-term uptick that eventually goes away after consumers find cheaper options.
That could mean going across the state border to buy tobacco or buying it on Native American reservations. Similarly, the tax increase may also lead to a decrease in tobacco purchases by consumers who live out of state near the Wyoming border.
“All the $1 tax is going to do is hurt retailers and convenience stores,” Larson said.
He added that tobacco users will find other ways to purchase products, which may lead to higher taxes down the road, hurting retailers even more.
Madden favors the 1 percent tax increase on leisure and hospitality, which was originally called a tourism tax. He used the example of buying a $5 hamburger and spending an extra nickel to help tourism, which he believes most people wouldn’t mind.
“The more tourists we have, the less money we have to pay as individual people, so why not contribute to promoting tourism?” Madden said. “I think that’s a good cause. It’s a good, noble effort. We have a good product to sell here, in tourism. Why not chip in and make sure that it happens?”
“That’s the minute I was against it,” Kinskey said, noting the proposal’s name change. “It made it real clear, it’s not really aimed at travel and tourism. It’s aimed front and center right at Wyoming people, whether it’s tourism-related or not.”
Kinskey believes the proposal would mainly benefit Teton County and Park County, but other parts of the state wouldn’t get much return on investment.
An alternative proposal from Senate President Eli Bebout, R-Riverton, would eliminate the 1 percent proposal and instead implement a 4 percent increase on lodging taxes statewide. That proposal would increase hotel taxes in Sheridan to 8 percent because of a 4 percent local lodging tax already in place.
Two revenue diversion options easily passed, one that would divert 1 percent of severance tax savings and one that would use savings from school land leases. Madden said the severance tax diversion could potentially open up between $90 and $100 million and the school leases would free about $42 million. The diversions could help cover the state’s projected $340 million education deficit for 2019-20.