ALBANY - Lawmakers are expected Monday to approve a $1.60 increase in the state tax on cigarettes to $4.35 per pack, and to again attempt collecting taxes on Indian tobacco sales to non-Indians.

The measures will raise $440 million to help close New York's $9.2-billion budget deficit. Gov. David A. Paterson included them in emergency spending bills required to keep state government running for another week in the absence of a completed budget.

Sources said Sunday that Paterson and leaders of the State Legislature's Democratic majorities had agreed last week to higher tobacco levies and enforcing tax collection on Indian cigarette sales. In the closely divided State Senate, however, all 32 Democrats must vote "yes" for the emergency bills to pass and avert a government shutdown because the 30 Republicans intend to vote "no."

"We've said all along that we won't vote for tax increases," said GOP spokesman John McArdle.

Austin Shafran, press secretary for Senate Democrats, said conference leader John Sampson of Brooklyn "is working with his members to pass the bills and keep government working."

Paterson aides noted Sunday that he signaled months ago his intention to combat smoking through tax hikes and a crackdown on bootlegging via Indian sales.

"We want to eliminate smoking because of the high cost to government for caring for people with smoking-related illnesses," said Paterson spokesman Morgan Hook.

The governor's proposal would make the state's cigarette tax the nation's highest.

Cigarette makers pointed to studies showing that more taxes often don't yield the promised revenue. For example, proceeds from a 17.5-cent raise in New Jersey's levy in 2006 fell 181 percent short of projections.

The American Heart Association shot back that higher levies would reduce cardiovascular diseases. "Increasing the cigarette tax will undoubtedly lower the state's smoking rate and place a dent in the billions spent to treat smoking-related illnesses," said Julianne Hart.

Under Paterson's plan, taxes on chewing tobacco, cigars and other similar products would rise to 75 percent of the wholesale price from 46 percent.

Indian tribes are blasting the new attempt to collect taxes on sales to non-tribe members. "This is an act of economic violence against the native people," said Richard Nephew of the Seneca Nation, the largest Indian cigarette seller.

The Senate also must adopt two budget bills passed Friday by the Assembly. The legislation authorizes $18.5 billion in spending for roads, prisons, mass transit and open-space purchases. It replaces the Empire Zones economic development program with the less-generous Excelsior Jobs Program.

Once Senate passage is achieved, experts said, about 70 percent of the $136-billion budget will be finished.

 

New tobacco levies

 

The State Legislature is expected to adopt emergency spending bills Monday that include increases in tobacco taxes to raise $440 million to help close the $9.2-billion budget deficit. The bills would:

Raise the state tax on cigarettes by $1.60 per pack to $4.35, effective July 1.

Increase the tax on chewing tobacco, cigars, snuff and other tobacco products by 29 percentage points of the wholesale price to 75 percent, beginning Aug. 1.

Enforce collection of taxes on Indian cigarette sales to non-Indians by working with wholesalers, starting Sept. 1.

Nearby states' per-pack cigarette tax*:

New York: $4.35

(subject to lawmakers' approval; currently $2.75)

Rhode Island: $3.46

Connecticut: $3

New Jersey: $2.70

Pennsylvania: $1.60


Highest:

New York, $4.35 per pack

Lowest:

Missouri, 17 cents per pack* excludes federal and local taxes; Sources: NYS Budget Division, American Cancer Society; Compiled by Albany bureau Chief James T. Madore

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