Governor says tax on smokes is the way to finance economic development

Governor Tom Vilsack says a hike in the state tax on cigarettes is the best way to bankroll the huge economic development fund he and legislators have been talking about. In January, Vilsack proposed a 500-million dollar state economic development fund to encourage business location and expansion in Iowa. Then, the Iowa Farm Bureau suggested raising a statewide property tax and creating a two billion dollar fund. Vilsack is urging legislators to quickly make up their minds about whether to create the economic development fund.Vilsack says the state can’t afford to wait, he says once they may a decision to make a decision, the process can move very quickly. Vilsack says raising the state cigarette tax about a quarter per pack would be enough to finance the sale of 500-million dollars worth of bonds. Vilsack says in order to bankroll the larger fund lawmakers seem to favor, there’d have to be a larger increase in the cigarette tax, and perhaps some state gambling taxes would have to be reserved as well.