Consumers see sales tax relief for first time in 15 years as states slow consumer tax increases.

RIVERWOODS, Ill.--(BUSINESS WIRE)--Sept. 25, 1995--While proposals for overhauling the federal income tax system proliferate, state legislatures have shown little appetite for change when it comes to consumer gasoline, sales and cigarette taxes, according to an annual survey by CCH INCORPORATED (CCH).

In fact, for the first time in 15 years, there were no increases in state sales taxes according to CCH, a leading provider of state and federal tax information and software to business professionals.

``Curbing of consumer taxes -- particularly sales taxes -- is mainly a combination of the `no new taxes' mentality and the fact that healthy state economies have eased budget pressures,'' said Sally Adams, an attorney and state tax analyst, CCH.

``Shifting tax burdens to local governments and withholding funding for significant infrastructure projects also have helped keep the lid on consumer tax hikes at the state level.''

As a result of these factors, Adams notes that for the first time in 15 years, none of the 50 states or the District of Columbia raised its sales and use tax.

Increases in other consumer taxes have slowed substantially as well, according to CCH, which annually publishes about 60 publications on state taxes, including ``State Tax Review.''

CIGARETTE, GASOLINE TAXES STABILIZING

Only four states raised cigarette taxes in the last year, slowing a pronounced trend of increases in recent years. However, the increases in Arizona, South Dakota, Vermont and Washington were substantial, with Arizona smokers hit the hardest. Residents of the Grand Canyon state experienced a 222 percent higher tax on cigarettes and now pay 58 cents per pack, according to CCH.

Vermont increased cigarette taxes 120 percent, to 44 cents per pack; 10 percent in South Dakota, to 34 cents per pack; and 44 percent in Washington, which now has the highest cigarette tax in the nation at 81.5 cents per pack.

``It might be more palatable for the state electorate to accept steep hikes in cigarette taxes, rather than sales tax increases, to fund state health care programs,'' said Adams.

Of particular note, the survey indicated Oregon, which recently enacted a comprehensive health care cost control program, was the only state to lower its cigarette tax -- by 10 percent, to 28 cents per pack -- in 1995.

Only five states raised gasoline taxes by a modest one to three cents a gallon. Residents of Connecticut, who pay the highest state gasoline tax in the nation at 34 cents per gallon (fully effective Oct. 1, 1995), will see a total increase of 3 cents a gallon in 1995. Nebraska (1.8 cents), Delaware (1 cent), North Carolina (0.3 cent) also increased the per gallon price of gasoline in their states.

New Mexico actually reduced the tax bite at the gas pump by 3 cents a gallon since last summer. However, 22 states and the District of Columbia now impose gasoline tax rates of 20 cents per gallon or more.

STATE LINES MAKE A DIFFERENCE

For the time being, the pattern of sales, gasoline and cigarette taxes offers the careful traveler dozens of opportunities for savings simply by crossing state lines.

For example, drivers might save taxes by buying gasoline in New York (8 cents per gallon) rather than Connecticut (33 cents per gallon), smokers can buy cigarettes in Virginia (at 2.5 cents a pack, the lowest rate in the nation) rather than the District of Columbia (65 cents).

Shoppers can choose to make purchases in a no-sales-tax state like Delaware rather than pay a 6 percent sales tax in neighboring Pennsylvania. In addition to Delaware, Alaska, Montana, New Hampshire and Oregon do not impose sales taxes on their residents. Rhode Island and Mississippi boast the highest sales tax rate (7 percent) in the nation.

It is most certain that the topography of state taxes will change if any of the current proposals for major reform of welfare programs, Medicare/Medicaid or the federal tax structure are enacted by Congress, since all would significantly impact state budgets and, potentially, state taxing systems, according to Adams.

``But don't expect many states to hike taxes in anticipation of less revenue or fewer services coming from the federal government,'' said Adams. ``As a general rule, they'll only raise taxes when their backs are against the wall.''

CCH INCORPORATED, located in Riverwoods, Ill., has been helping business professionals and their clients make informed decisions for more than 80 years. The company currently publishes more than 600 print and electronic publications on tax and business law information in the United States. -0- EDITOR'S NOTE: Detailed charts and graphs for the information above

are available.

CONTACT: CCH INCORPORATED, Riverwoods

Mary Dale Walters, 708/267-2038, or

Pattie Schiele, 708/267-7153