Barbour says cigarette tax is on the table

Gov. Haley Barbour said Wednesday he wants to overhaul the state tax structure in the next few years, and he didn't rule out a cigarette tax increase if it's part of a package that helps reduce Mississippians' overall bottom line.

"In looking at the system as a whole, the goal will be significant tax reduction," Barbour said. "But we may see some things in there that need to be adjusted up, which would allow us to reduce other taxes even more."

Barbour, a Republican running for re-election, has vetoed bills in the last two legislative sessions that would've increased Mississippi's cigarette tax to $1 a pack while decreasing the 7 percent grocery tax. Mississippi has the third-lowest cigarette excise tax - 18 cents a pack - and the highest state grocery tax in the nation.

Barbour is a former Washington lobbyist whose clients included tobacco companies, and critics often cite those connections. Supporters of the cigarette and grocery "tax swap" believe raising the cigarette tax would help reduce smoking, which costs the state millions of dollars a year for health care.

The state Tax Commission has found that increasing the cigarette tax to $1 a pack and cutting the food tax in half could create a small gain in revenue for the state.

Barbour also discussed the state tax structure Tuesday during a meeting with the editorial board of the Northeast Mississippi Daily Journal.

The governor told The Associated Press during an interview Wednesday at the Mississippi Emergency Management Agency headquarters in Pearl that the state's recovery from Hurricane Katrina is too uncertain for tax changes now. Barbour was at MEMA for a news conference on a two-day hurricane drill meant to prepare the state for the upcoming storm season.

"We still have too much uncertainty from Katrina. In a year, perhaps as long as two years, we will have stable revenue and at that time I will have already had a study of our tax system completed," Barbour said Wednesday. "We need to look at the tax system in its entirety if we are going to have appropriate tax reform and tax cuts."

Barbour said the study would consider all taxes that Mississippians pay - federal, state and local. Lawmakers would have to approve any changes in the state tax structure.

Barbour, elected in 2003, is expected to face Jackson attorney John Arthur Eaves Jr., a Democrat, in the Nov. 6 general election. Eaves and Barbour are expected to defeat lesser known opponents in the Aug. 7 party primaries.