Lawmakers discuss
raising cigarette tax

PROVIDENCE, R.I. (AP) - Facing massive budget deficits, Rhode Island's political leaders are considering raising the state's cigarette tax to a level comparable with neighboring states, according to incoming Sen. President M. Teresa Paiva-Weed.

Officials from the General Assembly and Gov. Don Carcieri's office have discussed increasing Rhode Island's cigarette tax of $2.46 per package to a level comparable with Massachusetts, which began charging $2.51 this year.

Rhode Island's western neighbor, Connecticut, charges a $2 tax on packages of 20 cigarettes and a $2.50 tax on packages of 25 cigarettes.

Paiva-Weed, endorsed by Democrats to become the next Senate president, said a final decision has not been made. Before changing the state's tax rate, lawmakers in the Democratic-dominated General Assembly must consider the impact on retail employers, particularly those near the state border, she said.

"Economic competitiveness with our bordering states, whether you're talking about income tax or sales tax, is going to be for me a guiding principle," Paiva-Weed said in an interview Tuesday.

Budget officials project that cigarette taxes will raise about $120 million during the fiscal year ending in June, or about 5percent of state tax collections. Meanwhile, Carcieri and lawmakers are struggling to close a $366 million budget deficit for the current budget year. A shortfall of $486 million is expected for the coming year.

Carcieri spokeswoman Amy Kempe refused to discuss the cigarette tax proposal. The governor will soon submit a plan to lawmakers for closing the current year's fiscal deficit, Kempe said. By law, he must also submit a budget plan for the coming year by Jan. 15.

Carcieri, a Republican, is awaiting recommendations later this month from a panel he commissioned in May to review the state's tax structure. He opposes increasing the state's personal income, corporate or sales taxes.

Lawmakers in the General Assembly would have to approve any changes to Rhode Island's tax rates. House Speaker William Murphy has not ruled out tax hikes, including the cigarette tax, said his spokesman, Larry Berman.

"At this point, with the large deficits looming, we don't know where it's going to take us," Berman said.