Big tobacco tax hike ahead for New York State?

March 31, 2008 - Big tobacco tax hike ahead for New York State?Gov. David Paterson and legislative leaders huddled behind closed doors and inched toward a budget deal on Sunday that could include increasing cigarette taxes by at least $1.25 per pack. Those familiar with the talks said the enhanced tax would be on top of the current $1.50 tax per pack upstate and $3 per pack in New York City, making New York the leader in such surcharges on smokers. The tax, as proposed, would reap about $265 million more in revenues, although an overall financial plan was still in flux late Sunday. They said the plans are to be printed into budget bills to be voted on as soon as today (3/31/2008). Also, the deal involves changing the way snuff and other moist tobacco products are taxed to raise a few million dollars more. The products would become more expensive because they would be taxed based on weight as opposed to a percentage of the wholesale price. The increased tobacco taxes would go a long way toward helping the Legislature pay for $500 million in extra spending above Paterson's plan. As a result, school aid is expected to rise $1.8 billion to more than $21 billion. Health care spending would rise above Paterson's plan by between $235 million to $245 million, largely because lawmakers wanted to provide more Medicaid funds to nursing homes, hospitals, pharmacies and home care providers. At present New Jersey's $2.58 tax on a pack of cigarettes is the highest in the nation. Click on image to enlarge..