Fallin proposes hikes in tobacco, fuel and sales taxes

OKLAHOMA CITY (AP) — Oklahoma Gov. Mary Fallin proposed a major overhaul of the state's tax code on Monday, encouraging lawmakers to increase taxes on fuel, tobacco and sales as part of an effort to eliminate the corporate income tax and the sales tax on groceries.

"By expanding the sales tax base, this allows us to eliminate the state sales tax on groceries and the corporate income tax," Fallin said.

Fallin is trying to minimize the impact of a roughly $870 million hole in the budget, or nearly 12 percent of state spending, that threatens to decimate funding to core state agencies that have seen budgets slashed in recent years amid a downturn in the energy industry.