Smokers, businesses brace for tax hikes July 1

Louisiana smokers will pay more for their vice, business owners will pay more for their inventories and car buyers will pay more for their titles beginning Wednesday.

All of those taxes — and more — are going up to begin the state's fiscal year July 1 to pay for higher education and health care.

The state cigarette tax will increase 50 cents a pack to 86 cents.

"I'm already broke and now I have to come up with 50 cents more a pack to kill myself," said Dontarius Lee of Monroe. "I'm laughing, but it's not really funny to me. I'm making $9 an hour part time, so it takes me more than an hour of work to pay for my two packs a day."

Karl Dhaliwal, whose company operates more than 20 convenience stores in northern Louisiana's commercial hubs of Shreveport and Monroe, said the increased cigarette tax will hurt his business, but he surprisingly supports it.

"I hope the extra cost helps keep young people from smoking," Dhaliwal said. "I have to carry cigarettes because it's a drawing card in my industry, but I wish I didn't."

In all, the Legislature raised more than $700 million in new revenue through tax increases or reductions in tax credits and rebates during its spring session to help offset a $1.6 billion budget deficit that lawmakers said would have crippled higher education and health care.

Among those was reducing businesses' inventory tax rebates from 100 percent to 72 percent. Until now, businesses have remitted their inventory tax to local governments but received it all back from the state.

Steve Taylor, northeastern Louisiana's largest used auto dealer, said he carries between $4 million and $6 million in inventory on his Car Town locations depending on the time of year.

"That add $15,000 to $20,000 more to the cost of doing business for me," Taylor said. "Sure it hurts."

And those who buy a vehicle from Taylor or other dealers will pay an extra $50 for their titles. The cost of a vehicle title will rise from $18 to $68.

"Will that bother the big shot who's buying a $60,000 luxury car? No," Taylor said. "But will it hurt somebody trying to buy a $1,500 car so they can get back and forth to work? Sure. The only people it will hurt are those who are struggling already."

Others are concerned a new cap on movie tax credits will cause the curtain to fall on Hollywood South.

"It will have an exodus effect," Mae Chapman, who owns a Lafayette-based casting company, said recently. "Just watch the people pack up and leave."

Most of the business tax revenue measures are set to expire in three years, but the cigarette tax and vehicle title fee increases are permanent.

Follow Greg Hilburn on Twitter @GregHilburn1