City watches tax bill closely

Published 12:00 am Tuesday, January 17, 2006

Natchez &8212; Many cities are watching closely a bill that would phase out the state tax on groceries while raising the tax on cigarettes, Natchez City Attorney Walter Brown said Thursday.

Municipalities receive 18 percent of the state sales tax collected in the city.

While most cities are not against the tax switch, &8220;we&8217;re a little concerned,&8221; Brown said. &8220;Hopefully it will not have any impact.&8221;

Email newsletter signup

The state House approved the bill Wednesday, and the Senate passed the same version last week. Thursday the House removed a procedural block for the bill, clearing the way for the bill to be sent to Gov. Haley Barbour.

Barbour has said he is against any tax increase, but he has not said whether he will veto the bill.

The bill passed with a wide enough margin in both houses to override a veto, according to the Associated Press.

Brown said he doesn&8217;t think the bill will have a substantial impact on Natchez, but he noted that the city collects nearly $5 million in sales tax per year, about half of the city&8217;s budget.

Mississippi has one of the lowest cigarette taxes and the highest state grocery tax rate in the nation, officials say.

The state charges 18 cents excise tax on every pack of cigarettes. The bill would bump that up to 75 cents a pack this July 1 and $1 a pack a year later.

The bill also would phase out the 7 percent grocery tax by 2014, starting with a reduction of 2 1/2 percentage points this July 1.

It passed the House 90-30 on Wednesday and was held on a procedural move that could have allowed more debate.

The House removed that hold on Thursday with no discussion.

The Associated Press contributed to this report.