Plan to raise cigarette, alcohol taxes advances

INDIANAPOLIS -- Smokers would pay 15 cents more in taxes for a pack of cigarettes, and state taxes on alcohol would be increased for the first time in 24 years under a proposal endorsed Monday by a Senate committee.\nThe bill would impose local income taxes to cover future growth in operating expenses for schools and local governments, unless a council representing counties, cities, towns and schools voted instead to raise property taxes.\nIf the councils opted for property taxes, they would no longer get property tax relief payments from the state to cover 20 percent of their costs.\nThe plan also would raise about $70 million a year in new state money by taking it away from counties and communities that get tax revenue from Indiana's 10 casinos. It would still leave them with about $205 million a year in casino tax money.\nThe increases in cigarette and alcohol taxes and the new gambling revenue would be used to prop up new spending included in a separate, two-year budget bill drafted by Senate Republicans. That plan is eligible for action in the GOP-controlled Senate this week.\nAlthough that budget bill and one passed by House Republicans would both raise property taxes, the House version would not raise state taxes.\nBut the Senate Republican spending plan would include higher spending increases for schools and Medicaid, and Senate Appropriations Chairman Robert Meeks, R-LaGrange, said the GOP tax proposals and redistribution of casino tax money would help make that possible.\nMeeks said those proposals should stand on their own in a separate bill but has acknowledged that much of the new spending in the budget bill assumes the tax bill will pass the Senate first. Any final budget bill will be negotiated by House and Senate Republicans and Republican Gov. Mitch Daniels.\nDaniels had proposed a one-year income tax increase on those making $100,000 or more, but that fell flat with legislative leaders. House Speaker Brian Bosma, R-Indianapolis, has frowned on any state tax increases, saying they would be a last resort for his caucus.\nSome lawmakers and local officials from casino counties strongly objected to having a portion of their tax revenue taken away. They argued the percentage they get is included in current law and is needed to provide such things as additional law enforcement and infrastructure needs that result from having a casino.