By Rachel Whitten
March 10, 2010

(KansasReporter) TOPEKA, Kan. - Tom Palace considered wearing a bulls-eye costume to testify before the Kansas Senate Assessment and Taxation committee hearing Wednesday.

As executive director of the Petroleum Marketers and Convenience Store Association of Kansas, Palace feels that the legislature’s proposed options for additional revenue target his industry at every turn. Cigarette, liquor, fuel and sales taxes are all options that the legislature is examining to cover an estimated $400 million budget shortfall.

“These taxes are all targeted and they all impact convenience stores,” Palace said.

Palace spoke Wednesday specifically against Senate Bill 516, which includes Kansas Gov. Mark Parkinson's proposal to increase the sales taxes on cigarettes from .79 cents per pack up to $1.34 per pack.  Cigars and other tobacco products taxes would be increased at the wholesale level by 30 to 40 percent.  Palace was one of a dozen or so opponents who spoke before the committee and a packed hearing room audience. 

 People crowded the sides, leaning against the wall as opponents spoke of  how the proposed tax increase would have a crippling impact on local mom-and-pop owned cigar shops, putting many of the 11 in Kansas out of business completely, 

“If this bill passes there’s no way I can stay open,” said Kendall Culbertson, the owner of Outlaw Cigar Company, of his store in Overland Park. 

Culbertson is in an unusual .position because he also owns a store in Kansas City, Mo., which he said will do even better business because Kansans will take their money over to the Missouri side where the taxes are lower. 

That’s a problem many businesses along the border face, the proposal’s opponents say.  Many people in Kansas City already fill up their gas tanks for 0.7 cents cheaper in Missouri, and the cigarette tax in Missouri is at 0.17 cents per pack.  If Kansas raises its comparatively higher cigarette tax even higher, those businesses will suffer.

“The cross border sales are a real thing,” Palace said. 

But proponents of the bill said the decrease in smoking and overall health problems related to it more than make up in costs for the lack of business in Kansas. 

“The public health will win no matter how you look at it,” said Danny McGoldrick, vice president for research at Campaign for Tobacco-Free Kids, who testified Tuesday before the committee.

He said both the proponents and opponents of the bill were there because they mutually know one thing is true about raising cigarette taxes

“The reason the opponents are there, is the same reason I was there, is because the increase in tax is going to reduce smoking, the only people who don’t want to do it is the people who want to sell more cigarettes,”  McGoldrick said.

The chair of the Senate Assessment and Taxation Committee, state Sen. Les Donovan, a Wichita Republican, thinks there are valid arguments on both sides. 

“I understand that people want to stop people from smoking… it’s unhealthy,  but having said that, as long as it’s a legal product I can’t get too worked up about allowing people to make a living off selling this product,” Donovan said. “I think the proposed tax increases are punitive, heavy handed.  Maybe there will be some ground there that will satisfy both sides a little bit.

Regardless, Donovan said, something has to be done about the budget shortfall.