Report To The People

Tobacco Tax Would Hold Down Car Tag Costs Under Proposal Negotiated By House And Senate

By Tommy Reynolds

  The House and Senate negotiators have agreed on House Bill 364 to increase Mississippi’s tobacco tax to an amount that will roughly equal the average tobacco tax of the neighboring states. Effective May 15, under the proposal, the tobacco tax would go from 18 cents per pack to 68 cents per pack. The Conference Committee proposal would plug a hole in the state’s Motor Vehicle Ad Valorem Tax Reduction Fund, which would help to lessen drastic increases in car tags after July 1 of this year.

  Since 1994, all sales taxes collected on the purchase of new automobiles have gone into a fund called the Motor Vehicle Ad Valorem Tax Reduction Fund, which has been used to reduce property taxes on automobiles. How the fund works is that on May 1 of each year, the State Tax Commission sets an amount that the State will agree to pay in a percentage amount on the property tax on each automobile. Currently, the credit rate is 5.5%. Recently, due to a decline in car sales, the State Tax Commission voted to reduce the car property tax credit amount to 3% of the assessed value of the motor vehicle, rather than the current 5.5%. This would mean a substantial rise in automobile taxes to be paid by the owner, as the amount of state payment to counties for each car tag purchased would be less. The compromise cigarette tax proposal legislation contains money which would be used to shore up the Motor Vehicle Ad Valorem Tax Reduction Fund, and would increase the credit paid by the State back to 4.25%. Also, all monies going for casual sales of automobiles would be required to be deposited in the fund in addition to new car sales. This would yield an additional $11 million for the Car Tax Reduction Fund. All toll, $27 million for Fiscal Year 2010, would be required to be appropriated as additional State funds for the Motor Vehicle Ad Valorem Tax Reduction fund, in addition to the 11 million dollars additional money to be received from casual sales tax for the fund.

  I am pleased that funds would be provided to offset car tag increases on Mississippians. It is my hope that additional funds will be provided for further reductions.

  In the next week, it will be necessary for House and Senate negotiators to agree on joint versions of state budget items, such as monies for mental health needs, funding for universities and colleges, Medicaid, highways, and many other necessary areas of state government.

  It is my hope that the differences between the House and Senate on budget items, can be speedily resolved, in a manner that will provide essential funding for necessary state services.

  If I can be of any assistance to you please call on me. My phone number in Jackson during the session is (601) 359-3365. The phone number in my Charleston office is (662) 647-3203, and my residence phone number is (662) 473-2571. I can also be contacted by writing me at my home address of 15 CR 429, Water Valley, MS 38965, or at my office address of P. O. Box 220, Charleston, MS 38921.

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