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from Brian Miller
Tennesseans for Fair Taxation (TFT)

South Carolina, the heart of tobacco country and home of the nation's lowest cigarette tax at 7 cents a pack, is rapidly changing along with the rest of the South. Competing bills in the South Carolina House and Senate would each raise the state cigarette tax in order to fund a cut in the state's 3% food tax and other tax changes. The House version would raise the cigarette tax 30 cents a pack and cut the food tax from 3% to 1.4%, along with other reductions. The Senate recently upped the ante by moving to raise the cigarette tax 45 cents a pack and cut the food tax all the way down to 1%. Both measures would completely repeal the remaining portion of the food tax in the coming years.

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Tax Swap advocates in Tennessee are pointing to South Carolina this week as a model for what could be done in Tennessee. "We've been advocating all year for a permanent, across-the-board cut in the state's food tax, paid for with an increase in the state cigarette tax. That's what the Tax Swap does," states Dave McIlwaine, State Chair of Tennesseans for Fair Taxation (TFT). "With the nation's highest average food tax and one of the lowest cigarette taxes in the country, this kind of common sense swap is long overdue and has broad support from both Democrats and Republicans." The Tax Swap currently has 16 Republican sponsors and 14 Democratic sponsors.

The Food Tax - Cigarette Tax Swap as originally filed (SB93/HB114), would cut the state food tax of 6% in half to 3%, paid for with a 44-cent cigarette tax increase. The latest proposals coming out of the General Assembly would incorporate elements of the Tax Swap, including a scaled-back food tax reduction as part of a broader cigarette tax increase. In the House plan, roughly a fifth of the 40-cent cigarette tax increase would be used to reduce the state food tax from 6% to 5.5%. At this point, it's unclear if the Senate's 20-cent cigarette tax increase would include a permanent food tax reduction or just a one-time holiday.

"If anything, the Senate should be talking about how we can strengthen the House plan by doubling or even tripling the food tax cut, instead of watering it down with a one-time holiday in place of a permanent cut," adds McIlwaine. "A one-time food tax holiday just isn't enough when you pay the highest food tax in the nation the rest of the year. We need a permanent, year-round food tax cut... all food, all the time."

Despite record surpluses in South Carolina, legislators are supporting the cigarette tax increase in order to pay for reductions in the food tax and other taxes that impact working families. Republicans control both chambers of the South Carolina Assembly as well as the Governor's mansion. The Governor of South Carolina is expected to sign the tax swap into law upon passage.

• The Herald (South Carolina) the SC measure can be viewed at
http://www.heraldonline .com/opinions/story/32081.html
• Previous press releases from TFT can be viewed at
http://www.yourtax.org/pressroom/index.php3
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