Henry’s ‘Best Offer’ Tobacco Plan Not Best for Oklahoma

Tuesday, Senate Republicans offered an alternative to Gov. Brad Henry’s “last, best” plan to raise the tobacco tax to pay for various health care initiatives.

“The governor’s ‘last, best offer’ is not what’s best for Oklahoma, and it has little chance of obtaining a three-fourths majority in the Senate and the House,” said Senate Republican Leader James A. Williamson of Tulsa.

“The Senate Republican alternative makes it clear that Republicans support improving both the health and the prosperity of Oklahomans,” he said.

“The Henry plan is woefully short on job-creating tax relief. It doesn’t do enough to discourage smoking. It is short on funding for trauma care. It shortchanges funding for indigent care in Tulsa. And it gives tribal retailers an unfair price advantage over non-tribal retailers,” said Assistant Republican Leader Scott Pruitt of Broken Arrow.

“Senate Republicans today are offering an alternative plan that fixes the problems in the Henry plan, and gives Oklahoma’s ailing economy a significant shot in the arm with unprecedented and immediate tax relief. We believe our plan has a realistic chance of getting the necessary three-fourths majority if it goes to a floor vote,” stated Assistant Republican Leader Glenn Coffee of Oklahoma City.

The Senate GOP plan would raise the net tobacco tax by 99-cents per pack, instead of Henry’s proposed 55-cent per pack increase. The plan adopts Henry’s health care spending proposals, but adds an additional $10 million for indigent care in Tulsa and $5 million more for statewide trauma care compared to the Henry plan.

The GOP plan also adopts the so-called “QuickTrip” language to allow non-tribal retailers to follow the same tax collection rules as nearby Indian smoke shops.

“It is critical that non-tribal businesses have an equal playing field,” Williamson said. “Those of us from the Tulsa area are particularly mindful of this in light of Git-n-Go’s recent bankruptcy.”

The Republican plan includes significant tax reform to spur job creation, investment, and economic growth in Oklahoma. In FY 2005, the Senate GOP’s plan would fully repeal the state’s 6.65% tax on all capital gains, and would increase the state’s death tax exemption to $1 million.

The GOP plan includes the tax cut for retirees from the Henry plan, and eliminates the controversial income tax trigger that automatically raises income tax rates when revenues decline.

Beginning in FY 2006, the Senate GOP plan would begin phasing down the state’s top income tax rate from 6.65% to 5.9%. A portion of the income tax relief would be implemented each year using all growth revenue above the level needed by the state to account for inflation and population growth. The phase down would likely take 3 to 5 years to be fully implemented.