SACRAMENTO – Assembly Speaker Herb Wesson proposed Tuesday to abandon a plan to raise California’s car tax and instead increase cigarette taxes to $3 a pack – the highest in the nation.
“This tax is a voluntary tax. If you don’t smoke, you don’t pay the tax,” said Wesson, D-Culver City.
Wesson’s proposal also includes a handful of other tax hikes, including a 5 percent tax on satellite television services and suspending the state’s solar tax credit.
He announced the plan to try to break a 37-day budget impasse shortly before he planned to bring it to the Assembly floor for debate Tuesday afternoon. Tuesday marked the second consecutive day lawmakers discussed the stalled budget after five weeks without public debate.
The state Senate approved a $99.1 billion budget plan on June 29 that was supposed to go into effect July 1. Assembly Republicans have refused to provide four of their votes needed to approve the budget by the required two-thirds majority, saying they object to $3.7 billion in tax increases included to help fill a $23.6 billion budget hole.
The budget approved by the Senate would raise cigarette taxes to $1.50 a pack, while vehicle license fees also would more than double for one year. For example, the license fee for a 2002 vehicle purchased for $33,000 would jump from $215 to $497.
Now, Wesson wants to scrap the car tax plan and raise smokers’ tax by $2.13 cents above the existing 87 cent-a-pack tax. That translates to a total $3 a pack in cigarette taxes.
Boosting taxes on smokers has been a popular way to ease budget woes this year, as states nationwide deal with gaping budget deficits and revenues that continue to sag.
Twenty states have enacted or proposed cigarette tax increases. Wesson’s proposal would mean the largest increase in the nation.
Republicans – who must supply four votes to pass a state budget – quickly said they would not support his plan.
Assembly budget chairman John Campbell, R-Irvine, said GOP lawmakers are happy to see the Democrats’ willingness to abandon the car tax proposal but trading one tax for another “is not going to get Republican support.”
California would then be overly reliant on smokers to balance its books, Campbell said. Davis’ budget also includes a plan to sell bonds to be paid off with future collections from the 1998 settlement with tobacco companies.
“It’s basically making the state’s fiscal health dependent upon other people’s bad health,” Campbell said.