Tax increases making their way through legislature

By Steve Wilson
February 19, 2019

Even in an election year, the Mississippi legislature is pondering tax increases.

There isn’t a gasoline tax increase bill that will survive the February 27 deadline for appropriation and revenue bills to be voted out of the originating chamber, but there are still other tax hikes on the table for cigarettes and hotel and restaurants.

Several cigarette tax hike bills are active in both chambers:

HB 1499 would increase the excise tax on non-cigarette tobacco products such as cigars and chewing tobacco from 15 percent to 22.5 percent, while HB 1500 would raise the per-pack cigarette tax rate from 68 cents to $1.18. Both are sponsored by state Rep. Bob Evans (D-Monticello).

Senate Bill 2665 would increase the per-pack tax to $2.18, which would be seven cents higher than the national average and much higher than surrounding states. It is sponsored by state Sen. Willie Simmons (D-Cleveland).

The cigarette tax hike bills most likely to pass are HB 1573, which is sponsored by state Rep. Jeff Smith (R-Columbus) and SB 2563, authored by state Sen. Brice Wiggins (R-Pascagoula). HB 1573 would increase the tax on a pack of cigarettes to $1.68, while SB 2563 would hike the per-pack levy to $2.18.

As for tourism taxes, there are several bills out there that would levy taxes on local hotels and restaurants to finance tourism-related projects.

In Mississippi, tourism taxes start as a local bill in the Legislature. These bills usually benefit a city or county in a legislator’s district and are one of the last chores the Legislature wraps up before leaving town at session’s end.

Once the local bill is passed, a referendum of local voters is required before the tax can go into effect. The tourism taxes usually have an expiration date of three years from passage. The money is collected by the business and sent to the Mississippi Department of Revenue, which then sends the proceeds back to the municipality or county that levied the tourism tax.

There are 90 of these taxes collected by the DOR on behalf of local governments in fiscal 2018, up from 59 in 2004. The DOR collected $98,275,512 from these levies in fiscal 2019.

One of the tourism tax bills, HB 653, is already sitting on the desk of Gov. Phil Bryant and it would resurrect a dead tourism tax for the city of Baldwyn, located between Tupelo and Booneville on U.S. 45.

The law would not only reauthorize the 2 percent tourism tax on restaurants and hotels for another three years, but also allow the city to retroactively collect the tax after it expired on July 1. A companion bill is SB 2277 and it was double-referred to the Senate Local and Private and Finance committees.

Despite notification from the state Department of Revenue, businesses in Baldwyn continued to collect the tax and have collected $13,765 from it so far this year. The city, which has a population of 3,304 according to the U.S. Census Bureau, will receive these proceeds despite the tax going off the books for a year.

HB 325 has already been signed into law by Gov. Bryant and is already in effect. The new law authorizes the city of Columbus and Lowndes County to levy a 2 percent tax on food and alcoholic beverages sold in restaurants with annual sales of $100,000 or more.

Of the proceeds, $400,000 will go to the city for parks and recreational activities, including maintenance and repair of facilities. Another $300,000 will go to the county for the same purpose and $250,000 will go to the Golden Triangle Development LINK, which will be used to fund promotion of community and economic development.

HB 1611 would reauthorize the city of Flowood’s 3 percent hotel tax and allow the fund to be used for construction of a conference center in the city. HB 1611 is in the hands of the House Local and Private Committee. SB 2988 is the companion bill in the Senate.

HB 1610 and HB 1602 would allow the city of Clarksdale to hit residents with a 14 mill property tax increase ($14 per every $1,000 of assessed value) to fund capital improvements in the city.  The two bills are in the hands of the House Local and Private Committee.

HB 1601 would allow the city of Saltillo to levy a 2 percent tax on hotels and restaurants for tourism, economic development, infrastructure and parks and recreation. SB 2853 is the companion bill in the Senate. The city has a population of 4,987, according to the U.S. Census Bureau.

HB 1565 would give Starkville the authority to increase its existing hotel and restaurant tax by 1 percent to finance construction of a new sports complex and improve existing sports and recreation facilities.

HB 1423 would allow Lexington to impose a 2 percent tax on restaurants to fund recreation, tourism and parks. According to the Census Bureau, the city has a population of 1,523.

SB 2185 would authorize Carrollton to impose a 2 percent tax on restaurants to fund tourism and parks and recreation. Carrollton has an estimated population of 178, according to the Census Bureau.

SB 2896 would authorize North Carrollton to hit local restaurants with a 2 percent tax to fund improvements for tourism and parks and recreation. North Carrollton has an estimated population of 444, according to data from the Census Bureau.

SB 2854 would allow Charleston to levy a 2 percent tax on restaurants to fund tourism and parks and recreation projects. The city has an estimated population of 1,958.


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