- The Washington Times - Wednesday, February 25, 2004

RICHMOND — The House’s tax-writing Finance Committee yesterday killed two Senate bills that would have imposed about $3.8 billion in new state taxes, including a boost in the sales tax from 4.5 percent to 5.5 percent and increasing the nation’s lowest cigarette tax.

The lopsided votes cast into limbo the next steps by Gov. Mark Warner and the General Assembly to recast the state’s tax structure and generate additional revenue for a cash-strapped state budget.

The panel took its action hours after its Senate counterpart picked apart a House bill supporters say would generate $520 million for the state by ending sales-tax exemptions for industries as large as utilities and airlines and as small as taxicab companies.

The Senate panel, however, took no vote on the House tax bill.

“It sounds to me like they have no intention to compromise,” said Sen. John H. Chichester, Stafford County Republican, after the House panel voted 16-6 to kill his omnibus tax bill and 17-5 to bury his measure to increase the cigarette tax from 2.5 cents a pack to 35 cents.

That leaves only the bill, authored by Delegate Phillip A. Hamilton, Newport News Republican, to repeal sales-tax exemptions for a dozen categories of industries in the state tax code still alive, and it is procedurally unsuitable to being amended into a broader tax measure, Mr. Chichester said.

It also widened the gulf between with wildly different philosophies between the House and Senate on taxes and funding state services and did nothing to avert what members of both parties predict will be an impasse in compromising on a new two-year state budget.

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