Gov. Mike Beebe last week signed a bill increasing in Arkansas’ cigarette tax that will generate $86 million a year for health care, including a statewide trauma system for emergency rooms and an expansion of health insurance for children.
The tax hike, which was approved by three-quarters of the General Assembly, goes into effect March 1.
The bill increases taxes on cigarettes to $1.15 from the current 59 cents a pack. The tax on other tobacco products was raised to 68% of the selling price, up from 32%.
Beebe supports a bill that has passed the Senate and is pending in the House that would lower the state’s 3% sales tax on groceries to 2%, which would cut state revenue by $40 million a year. The 2007 Legislature reduced the tax to 3% from 6%, and the governor said he would like to eliminate the grocery tax.
Revenue from the tobacco tax is not dedicated to state health programs but Beebe said those efforts would receive a high priority during budget development. A plan to strengthen Arkansas’ trauma system failed in the 2007 Legislature over a funding dispute.
Proposals for allocating tobacco tax revenues in fiscal 2010 include $25 million for trauma system improvements, $15 million for 59 federally funded community health centers, and $3.5 million to extend health insurance to an additional 20,000 children.
