CARSON CITY — A Senate committee Tuesday considered even higher cigarette taxes than initially proposed by Gov. Brian Sandoval to help close a $144 million gap in anticipated revenues and the governor’s $7.4 billion spending plan.
An amendment to Senate Bill 483, the so-called “sunset” bill, would raise the tax on cigarettes by $1 per pack, up from the 40-cent increase originally sought, bringing the total to $1.80 per pack. The current tax rate is 80 cents.
The initial 40-cent increase was expected to generate another $81 million over the next two years. Upping the increase by another 60 cents would generate $111 million more, according to calculations by legislative fiscal staff.
All told, the higher cigarette taxes would generate $348 million more for the state general fund over the two-year budget cycle than current levels.
The calculation takes into account an expected reduction in cigarette sales because of smokers who choose to quit instead of paying higher prices.
State Sen. Michael Roberson, chairman of Senate Revenue Committee, said the panel will vote on the bill Thursday.
The sunset bill also includes an array of other taxes enacted in 2009 that were supposed to be temporary fixes as Nevada’s economy plummeted during the recession. But those levies, including higher payroll taxes and sales taxes, have twice been extended and Sandoval wants to make them permanent.
The higher cigarette tax was proposed after the Economic Forum, a panel of independent fiscal experts, on Friday projected Nevada would take in $6.3 billion in revenue during the two-year budget cycle that begins July 1.
But those projections are based on existing law, including the elimination of sunset taxes currently set to expire June 30. The forum also reduced projected revenue to about $6.15 billion to account for various tax abatements that could be exercised, including $45 million a year pledged to Tesla when the electric car maker agreed to build its $5 billion battery factory in northern Nevada.
Roberson said passage of the sunset bill and Sandoval’s proposed business license fee increase, now in the Assembly, would close the funding gap to $33 million.
Senate Bill 252, the governor’s business license fee bill, would replace the existing $200 annual license fee paid by companies big and small with a tiered rate based on industry type and gross receipts.
A competing tax bill is also pending in the Assembly.
State lawmakers face a June 1 deadline to pass a tax package and budget or face a special legislative session.
Contact Sandra Chereb at email@example.com or 775-687-3901. Find her on Twitter: @SandraChereb.