Minnesota DFL Lawmakers Agree to Raise Cigarette Tax by $1.60

Published in CSP Daily News

Would bring per-pack levy to $2.83, 30 cents higher than in Wisconsin

Mark Dayton

ST. PAUL -- Democratic–Farmer–Labor Party (DFL) lawmakers in Minnesota agreed on a tax package Thursday that will require smokers--among others--to pay more, reported the Associated Press. The per-pack tax on cigarettes would rise by $1.60.

Minnesota's cigarette tax would jump to $2.83 per pack, rising 30 cents above what Wisconsin charges and going well beyond the rest of the neighboring states. It would bring in $370 million; and tens of millions of dollars would come through higher excise taxes on snuff and cigars, too.

The increase will be "extremely destructive to retailers across the state," Tom Briant, executive director of the National Association of Tobacco Outlets (NATO), told CSP Daily News.

Meanwhile, some corporate tax preferences will go away. Sales taxes will be imposed on business transactions involving warehousing, electronic equipment repair and commercial maintenance, AP said.

But there will not be any increases to the alcohol tax, as House Democrats had sought.

Governor Mark Dayton(DFL), House Speaker Paul Thissen (DFL) and Senate Majority Leader Tom Bakk (DFL) said during a news conference Thursday that the agreement will pave the way for the Legislature to pass its budget before a mandatory Monday night adjournment to the session.

And they said the tax increases--a combined $2 billion over the next two years--will plug a $627 million projected deficit and pay for a big jump in education spending and other priority programs.

"We are on the cusp of an important course correction in our state's history," Thissen said.

All three in the state's all-Democratic power alignment made concessions that they said were needed to close the deal.

"This is the linchpin of the session," Bakk said. "Now everything will fall in [place]."

Republicans said Democrats were going too far in their push for higher taxes. Senate Minority Leader David Hann (R) said the taxes targeted at businesses will trickle down the retail chain.

"This idea that it is only going to affect businesses is nonsense. It is ultimately going to affect consumers and everybody that buys anything those businesses support," Hann said.

By Thursday evening, the House and Senate had given final approval to a couple of budget bills, said the news agency.

One was a package of economic development programs that boosts state spending in that area by $90 million. It includes incentives for businesses to add to their payrolls or expand their physical presence in the state.