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New law gives tobacco wholesalers extra $4 million

Jun 29, 2010 11:09:00 PM - thestate.com

South Carolina tobacco wholesalers will pocket an additional $4 million to collect and process the 50-cent-a-pack state cigarette tax increase that takes effect Thursday.

The money is from a 3.5 percent incentive given to retailers to collect and report tax collections to the state Department of Revenue by certain deadlines. Currently, tobacco wholesalers receive about $800,000 a year to process cigarette sales, according to state budget data. That total will jump to an estimated $4.8 million – a sixfold increase – once the state starts collecting a bigger tax.

House Majority Leader Kenny Bingham, R-Lexington, said he and other lawmakers thought the incentive only applied to the original 7-cent-a-pack cigarette tax. Bingham opposed the idea of cigarette wholesalers profiting from the increased tax when their responsibilities have remain virtually unchanged.

“It is not to give them a windfall,” Bingham said. “We will deal with that in January,” when the Legislature opens a new session. Bingham said little was said of the incentive during the debate, which focused more on how to spend the money the new tax would generate.

USA, South Carolina: (Latest Stories)