Tax Foundation Says Cigarette Tax Is an Unreliable Source of Revenue
Kentucky legislators continue to look for ways to increase revenue for the state’s public pension systems. One option under consideration is raising the state’s cigarette tax by 50 cents.
Morgan Scarboro is a tax analyst with the Tax Foundation. She said Kentucky needs tax reform, not cigarette tax hikes.
“Typically what we look for at the Tax Foundation in a good tax policy is neutrality. We don’t want tax policy to try and influence an individual’s behavior,” said Scarboro. “So we see that as sort of a negative on the cigarette tax as well.”
Scarboro said basic services like education need to be funded by a reliable revenue source.
A Tax Foundation report shows Kentucky’s 2009 cigarette tax hike led to a brief jump in revenue that diminished in later years.
The Kentucky House has passed the cigarette tax hike as part of a two-year budget bill. That spending plan now goes on to the Kentucky Senate.