Government & Politics

Proposed Kansas tax hikes on cigarettes, alcohol draw backlash at hearing

Taxes on alcohol, cigarettes and cigars could be on the rise in Kansas.

That prospect worries business owners who made it clear to Kansas lawmakers Tuesday that they were against such moves.

But others, who focused on the dangers of smoking, said Gov. Sam Brownback’s proposed tax increases on cigarettes and tobacco products would help the health of people across the state.

“There is nothing that the state Legislature could do to more directly impact our smoking rate than to increase the tobacco tax,” said Roy Jensen, director of the University of Kansas Cancer Center.

There wasn’t similar support for an increase in the state’s liquor enforcement tax.

Most of the people who testified during a House tax committee hearing spoke against the tax increases, including restaurant owners, a brewing company and groups that represent Kansas retailers.

They told legislators through both written and in-person testimony that they feared losing business if the governor’s tax increases are passed.

“I’ve had some great success in Kansas but it’s getting harder and harder to get to the bottom line,” said Michael Garozzo, who runs Garozzo’s Ristorante, with locations in Missouri and in Kansas in Overland Park.

Brownback in January put forward a budget proposal that would double the liquor enforcement tax to 16 percent. He also asked lawmakers to increase the tax on cigarettes by $1 a pack and to raise the state’s tax on tobacco products to 20 percent.

Curt Diebel, president of Diebel’s Sportsmens Gallery in Leawood, said he understood that balancing the state budget was difficult. But it should be done fairly, he said, and not through a tobacco tax increase.

“I think my customers will run to Missouri,” Diebel said of his business, which sells cigars.

That fear was shared by owners of other Johnson County businesses who testified Tuesday that Missouri businesses would benefit from the Kansas tax increases.

Kevin Timmons, owner of Nick and Jake’s in Overland Park, said he would have to pass the liquor tax increase along to customers.

“People that want to have a drink that have to pay more for that drink may not get that appetizer or may not get that extra sale of dessert,” Timmons said.

Janez Lomshek, a partner in two Talk of the Town grill and bar locations in Johnson County, said the liquor tax increase would hurt his business.

“In recent years, it seems like our industry has been targeted specifically by the government on a lot of different areas,” Lomshek said.

State officials estimate that the tax bumps would bring in almost $210 million over two years. The state is facing more than $1 billion in projected budget shortfalls through the end of the 2019 fiscal year.

“It seems like we kind of forgot that money can walk,” Rep. Ken Corbet, a Topeka Republican, said after the testimony had ended.

Rep. Erin Davis, an Olathe Republican on the tax committee, said she might vote for the cigarette tax increase based on the health reasons.

But the feeling didn’t carry over to the liquor tax increase.

“There were no proponents that came to testify today, and I think that that probably is illustrative of the overall sentiment on that tax,” Davis said.

Hunter Woodall: 785-354-1388, @HunterMw