06:33 PM CDT on Thursday, April 27, 2006

By APRIL CASTRO / Associated Press Writer

AUSTIN -- A pack-a-day will cost Texas smokers an extra $365 a year under a cigarette tax increase approved in the House on Thursday.

The higher tax, which would kick in Sept. 1, is expected to generate $680 million that would be used to offset school property tax cuts in Gov. Rick Perry's plan to revamp the way Texas funds public education.

The tax plan, which also includes an expanded business tax, is part of Perry's answer to a Texas Supreme Court ruling declaring the state's school funding system unconstitutional and ordering it fixed by June 1. Lawmakers are in the second week of a 30-day special legislative session to tackle the issue.

Perry has said that the plan would reduce school property taxes by one-third, although the House version does not prescribe enough money to get to that level.

Before it can become law, the measure must be approved by the Senate, which is expected to take up the issue next week. If the Senate agrees, the new tax will be added to the 41 cent tax smokers already pay in Texas.

With an 82-57 vote, supporters fought efforts to reduce the increase.

Critics argued that Texas smokers would cross state lines to buy cheaper cigarettes, or buy them online to avoid the tax.

At $1.41, Texas' taxes on cigarettes would be significantly higher than surrounding states -- almost twice as high as New Mexico's 91-cent levy. A carton there would be about $9.68 cheaper.

"A lot of people think if you raise the price high enough, people are just going to quit smoking. I'm not one of those," said Rep. Warren Chisum, a Pampa Republican who tried unsuccessfully to reduce the tax increase to 65 cents a pack. "They just get them from another source."

Perry has argued that the higher tax would deter people from smoking, saving the state additional money in health care costs related to smoking.

"If the choice is between taxing property or taxing poison," he said, "then I say let's tax cigarettes."