On The Lege
The Tax Lowdown
By Amy Smith, Fri., April 28, 2006
Big Tobacco and poor smokers gained a temporary reprieve late Monday night, thanks to a technical error that prevented a proposed cigarette tax hike from passing out of the House with four other bills comprising Gov. Rick Perry's sweeping tax package. House members will take up the tobacco bill, HB 5, anew today, Thursday, and – who knows? – tobacco lobbyists may have used the extra time blowing smoke rings at the Capitol, or fattening a few campaign coffers trying to derail the measure.
As for the rest of the tax bills, the House spent all day and much of the night Monday considering the five-part plan – a cornerstone of Perry's re-election campaign as much as it is a Supreme Court mandate – to lower local property taxes by about one-third and institute a new tax system to pay for public education. Lawmakers have until June 1 to come up with a new school funding plan that, for now, doesn't actually provide schools with new money or give teachers their first pay raise in many years. For that reason, education groups stand largely opposed to the plan in its current form.
That the House took up and passed a weighty tax package in a single day, just one week into the session, was actually quite an accomplishment. While there was no getting around the strong arm of House Speaker Tom Craddick, who limited the scope of Monday's debate, the back-and-forth between opposing sides was lively and impassioned and refreshingly free (mostly) of the partisan rancor that sullied last year's failed sessions on school finance. Then again, the session is just getting off the ground, so there is still plenty of time for the wheels to come off.
Anyway, Rep. Senfronia Thompson, D-Houston, used one of her many occasions at the back mic on Monday to sound a note of sympathy for low-income smokers, even though that particular bill was still hours away from consideration. "I've never smoked," Thompson told fellow lawmakers. "I'm not an advocate of smoking. But sometimes a cigarette or a dip of snuff is all a person can afford to help them with their depressive moments. They may not be able to afford 20 pills of Prozac, but they can afford a dip of snuff."
It's no secret that the tobacco industry's favorite consumers – poor people and minorities – would be the hardest hit by a proposed $1 tax increase on cigarettes and other tobacco products. (A House committee had initially proposed phasing in a $1.46 increase over three years, but switched back to Perry's original $1 hike after a quick huddle Monday night). Poor Texans who smoke would also be shut out of any benefits reaped from the plan's property tax decrease.
Lawmakers – Democrats, in particular – have mixed feelings about raising cigarette taxes, for a number of reasons, not the least of which is the recent discovery of an $8.2 billion surplus in the state budget. Because studies bear out claims that a tax increase serves to discourage people from smoking, lawmakers can't very well quibble with the public health benefits of a smoke-free society. On the other hand, a tax increase that is both discriminatory and regressive – the less you make, the more you pay – is an especially tough call for legislators who represent low-income Texans.
Anti-tax Republicans are less squeamish about signing off on a so-called "sin-tax," like the one Perry is proposing, but that's where they draw the line. In fact, many among the anti-tax House members voted against the Republican business tax (HB 3), with 16 Republicans joining Democrats on the lower end of the 80-69 vote. Brotherly love notwithstanding, Rep. Bill Keffer, R-Dallas, urged his fellow "limited government" advocates to vote against the bill carried by his older brother, the kinder, gentler Rep. Jim Keffer, R-Eastland, who chairs the House Ways and Means Committee. "I love my brother," Jim Keffer said, after Bill spoke. "We disagree on this, but I still love him." Ten Democrats helped flesh out the number of "yes" votes on the bill, encouraged by the rah-rah duo of Reps. Vilma Luna, D-Corpus Christi, and Mike Villarreal, D-San Antonio, who both sit on Jim Keffer's Ways and Means Committee. To help ensure the bill's passage, Craddick wasted no time casting a "yes" vote in view of waning enthusiasm among tax-skittish Republicans, and lingering memories of razor-thin votes during last year's marathon sessions. Austin Democratic Rep. Eddie Rodriguez scored one for the little guy with an amendment allowing law firms that provide pro bono services to the poor to deduct certain costs from revenue calculations under the revamped franchise tax. The deduction also applies to pro bono work on workers' comp cases.
The vote on the $2.4 billion property tax cut, HB 1, was an altogether different story, with House members going full tilt to deliver a resounding 139-5 win-win-win for homeowners (it is an election year, after all). On this, Austin Rep. Elliott Naishtat successfully amended the bill to build in some tax relief for people with disabilities and seniors over 65, who currently have their school property taxes frozen. By Naishtat's estimates, more than 1.1 million seniors and over 146,000 people with disabilities will benefit from the measure, which requires an amendment to the state constitution.
HB 2, which would draw money from three new sources – business, cigarettes, and a revised sales tax on used cars – to replace the money lost from property tax cuts, passed 81-65. Democrats and public school advocates oppose it because they say it would eventually deprive other basic services of needed funds. HB 4, which would require used-car buyers to pay sales taxes on up to 80% of the blue book value of a vehicle, passed on a 77-65 vote.
The package of tax bills – with or without the cigarette tax component – now heads to the Senate, where the Perry plan has thus far gained little traction and few kind words from Lt. Gov. David Dewhurst.
Got something to say on the subject? Send a letter to the editor.
