Tax-revenue change would hurt city, some say|[2/1/06]
Published 12:00 am Wednesday, February 1, 2006
A bill to reduce state grocery taxes and increase cigarette taxes would hurt Vicksburg, Sen. Mike Chaney said, but he and city officials said they don’t know by how much.
Chaney, who initially voted for the bill, has said since it was vetoed by Gov. Haley Barbour that he now will vote against an override.
“I started doing my own digging,” Chaney said. “I found the numbers just wouldn’t work.”
As introduced by Lt. Gov. Amy Tuck and passed by the House and Senate before going to Barbour, the legislation would cut the grocery tax in half by July 1, 2007, then phase out the remaining 3 1/2 percentage points by 2014. The cigarette tax would increase by $1 by July 1, 2007. Mississippi has the third lowest cigarette tax in the country, 18 cents per pack.
Chaney said he does not think Tuck is using accurate numbers from the Mississippi Tax Commission to show how the bill will affect municipalities.
Tuck’s numbers indicate the $57.6 million annually that municipalities receive from the sales tax on food would instead be generated through the sales of cigarettes.
The lieutenant governor’s numbers show Vicksburg receiving $1,163,149.57 annually if the tax changes are implemented.
However, Barbour, who has said eliminating the grocery tax will hurt the state, released numbers showing Vicksburg would receive only $196,579.31 if the tax changes are passed.
Paul Rogers, strategic planner for the city, said the sales tax numbers he’s given from the state include beverage and food sales. The grocery tax revenue is not isolated, so city officials can not determine how much money is generated each year in Vicksburg from the grocery tax, Rogers said.
Mayor Laurence Leyens said using the numbers city officials are given from the state, there is no way for the city to track how much it sends to the state in food sales each year.
“We never get a breakdown on the sales tax,” Leyens said. “There’s no way for us to measure grocery tax revenue because the state won’t allow us to get that information.”
Cathy Waterbury, communications director for MTC, said the commission recently had to do a lot of digging to come up with the amount of revenue each city generates from the grocery tax.
She said when stores that sell non-prepared food send in their tax information, it includes other items such as household cleaning products and tools that aren’t included in the grocery tax.
However, after the commission went through the sales tax information and pulled out the food items, Waterbury said the commission found that Vicksburg received about $1,135,471 in 2005 from the state for its share of the grocery tax. The state returns to each city 18.5 percent of the total sales revenue generated in the city.
Rogers said Vicksburg reported about $105 million in food and beverage sales in 2005. The city also reported $7 million in food and beverage taxes.
Leyens said he likes the idea of reducing the grocery tax, but he is concerned about the loss of revenue for the city.
“They were going to fix everybody at their current rate, but my issue is when you have a city like us that’s growing, how do you fix that?” Leyens asked. “I don’t have a problem with reducing the grocery tax. I’m for it theoretically, but I think the approach is not going to be sound for the city financially.”
North Ward Alderman Michael Mayfield said he is not sure what effect the bill would have on Vicksburg.
“Reducing the grocery tax will have an effect on every city,” Mayfield said.
As for Vicksburg, he said, “We’ll really have to put numbers together and try to do a guesstimation.”
The North Ward Alderman serving his first term at City Hall said he supports the bill as passed.
“I personally would be in favor of decreasing the grocery tax,” he said. “I know it would have an effect, but I don’t think it’ll be anything that will be detrimental to Vicksburg.”
South Ward Alderman Sid Beauman said he has not made a judgment on the proposed bill, because he is not sure what kind of effect it will have on the city.
Taxes on all retail sales are paid to the state, and percentages are returned to cities.
Chaney said he thinks both Tuck’s and Barbour’s numbers are inaccurate. But, he thinks Vicksburg could lose $3.9 million if the grocery tax is phased out. He said he does not think the increase in the cigarette tax will be enough to prevent the multimillion-dollar loss. Chaney said when the state of Oklahoma raised its tax on cigarettes, the sale of cigarettes in the state went down 35 percent.
“The bottom line is nobody’s got a good handle on it,” Chaney said. “Using the estimates that were proposed, it’s a bad bill. They’re giving up all the revenue that’s needed to run the state government.”
Tuck, who as lieutenant governor, assigns bills for consideration by the Senate, has not said when she will ask for action on overriding Barbour’s veto.