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House budget raises taxes on pills, cigarettes


By Greg Bird

The Kentucky House of Representatives passed their version of the new two-year budget last week. In a somewhat surprising move, the budget contains tax increases of about $250 million a year, which would be used to overturn some of the budget cuts proposed by Governor Matt Bevin in his own budget.
Included in the budget are two interesting items: increasing the tax on cigarettes by 50 cents, and a 25-cent tax per dose on opioids. The additional revenue generated by the new taxes would be used to offset education cuts proposed by Governor Matt Bevin in his version of the budget.
The budget also eliminates a $10 state income tax credit for individuals.
By raising the cigarette tax to $1.10 a pack, an estimated $127 million in funding is expected to be produced in the first year. The opioid tax could generate between $70 and $75 million a year as well.
Those gains would increase SEEK funding to school districts, which would be a welcome relief to school districts throughout the state as the Governor’s plan called for a reduction. It also includes transportation funding for districts, which was a major point of contention for state education officials. The House budget also reverses the Governor’s plan to eliminate 70 programs, such as the Kentucky Mesonet weather monitoring network.
It would also circumvent the proposed 6.25 percent cut in higher education.
Kentucky is one of a dozen states to have attempted to pass a tax on opioid doses in the previous year. To date none of the efforts have passed due to legal concerns.
One issue is attempting to prevent drug manufacturers from passing the cost of the tax on to consumers. Advocates say the Attorney General has authority to prosecute companies that would attempt to do so under his consumer protection powers.
The law would require all pharmaceutical wholesalers and online pharmacies to obtain a license in Kentucky to operate and must submit monthly reports and payments.
Proponents say the law would generate additional revenue, which would be directed to the General Fund and used to fund public education and other services.
It is unclear what the largely Republican Senate will do with the budget proposal now that it has passed the house and forwarded to the senior legislative body.

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