Idaho lawmakers avoided large increases in taxes during this year's legislative session, but calls for raising some taxes, including on tobacco, are likely to resurface next year.
All changes to state revenue collections must start in the Idaho House, and such changes generally go through the House Revenue and Taxation Committee, which is led by Rep. Dennis Lake, R-Blackfoot. Lake, who's led the committee since 2007, announced late last year that he backed a plan to increase Idaho's cigarette tax by $1.25 a pack. That plan, which would've raised more than $50 million, was never introduced in Lake's committee, due to a lack of support from the rest of the GOP committee members.
“I thought that by the end of February, the first of March, we'd be looking for additional revenue, yet the Legislature seemed more willing to make the cuts,” Lake said.
House Democrats repeatedly called for a hearing on the tobacco tax increase, saying it could thwart tobacco use and prevent reductions in state services. Democrats in both the House and Senate also called for additional revenues to prevent a reduction in total state and federal funding for public schools.
Lake told IdahoReporter.com that the issue will come back in 2012, but he's not sure there will be a different result unless economic circumstances change.
Predicting the future of Idaho's economy the past few years has proven difficult for both lawmakers and economists, but if conditions worsen, the tobacco tax and more could be on the table next year. Rep. Ken Roberts, R-Donnelly, the House Republican caucus chair and spokesman, said that if conditions worsen and lawmakers run out of ideas for spending cuts, lawmakers would consider raising more sin taxes than just tobacco.
Lake said that, as evidenced this year, changing taxes on specific industries can be difficult. Lawmakers would be sure to hear from opponents to tax increases on cigarettes, beer, wine, and alcohol. “They all have a very strong lobby behind them,” Lake said.
Lake agreed with Roberts that Idaho's economic situation will drive any talk of tax increases.
He said that if the state economy far exceeds expectations — growing at 8 to 10 percent, rather than the budgeted 3 percent – talk of lowering taxes could gain steam. A plan by some House Republicans to reduce Idaho income tax rates, which currently top out at 7.6 percent for individuals and 7.8 percent for businesses, could also get consideration again next year.
However, Lake said that loss to state revenues would need to be made up somehow. “Quite frankly, our corporate tax is too high,” Lake said.
Efforts to get rid of some sales tax exemptions and start taxing some services are also likely to come back, though Lake feels taxing services is unlikely.
“Unless the state comes in dire straits, I don't see us going there for a long time,” he said.
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- House Revenue and Taxation Committee Chair Dennis Lake, House Revenue and Taxation Committee Chair Dennis Lake