Kentucky - proposal to tax moist snuff based on price rather than weight fails..

February 11, 2010 - Kentucky tobacco farmers have been fighting a proposed change in Kentucky's taxing system that would levy higher taxes on smokeless tobacco based on price instead of weight; one of many moves the General Assembly is considering to help balance the Commonwealth's estimated $1.5 billion budget shortfall.

They got their wish Tuesday afternoon, February 9th as the proposal included in House Bill 296 was rejected by the House Appropriations and Revenue Committee by a 14-12 vote where 15 votes were needed to get to the House floor for a vote.. Under the bill, the tax on premium, moist snuff would have been based on price rather than weight. That change would have increased the tax from 19 cents to about 29 cents a tin.

The bill would have dropped the current wholesale excise tax rate for tobacco products other than cigarettes from the current 15 percent to 12.1 percent.

Makers of higher-priced snuff said shifting the tax to wholesale prices would have raised the levy on their products. However, lower-priced snuff makers said it would amount to a tax cut for their product and would put all makers on equal footing.

The bill pitted three Kentucky moist snuff manufacturing plants against U.S. Smokeless Tobacco, which operates a processing facility in Hopkinsville. U.S. Smokeless Tobacco is owned by Altria, the parent of Philip Morris USA. U.S. Smokeless plant manager Danny Kingins said the change would result in the tax on a can of Skoal or Copenhagen increasing from 19 to 29 cents per can, while Longhorn, made by Swedish Match would drop from 19 cents to 13 cents per can. A statement from Swedish Match said the company was disappointed that the committee didn’t pursue the bill.

References: Snuff tax changes rejected by Gregory A. Hall (ghall@courier-journal.com), Louisville Courier-Journal, 2/9/2010; Tobacco tax proposal voted down by House committee by TOM BERRY, Staff Writer, Murray Ledger & Times, 3/11/2010.

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