BLYTHEWOOD - A proposal to lower the state's income tax would put more money back into the pockets of small businesses and individual income earners, Gov. Mark Sanford said Monday during a tour of businesses.

Families earning $40,000 a year could save about $800 each year on income taxes, Sanford said.

His proposal would lower the current state income tax of 7 percent to 5 percent over 15 years. That's when the full savings would kick in.

More important, Sanford is pushing the plan to improve the economic climate in South Carolina and attract more businesses here. Sanford toured a small North Charleston print shop, a Greenville technology firm and a Blythewood electronics manufacturing company.

Under Sanford's plan, state taxes on cigarettes would be increased to 53 cents a pack, up from 7 cents a pack, with the expected $150 million annual revenue dedicated to Medicaid programs.

That tax increase would be coupled with the income-tax reduction, which would help "create a more vibrant economy in South Carolina," Sanford said.

Each dollar in income-tax relief generates about $1.25 in economic activity, Sanford said. The governor expects his proposal to generate about $7 billion in additional economic activity in South Carolina over the 15-year life of the plan.

"We've said all along that income-tax relief is key to creating jobs and spurring economic growth in South Carolina," Sanford said. "Central to the notion of stimulating our economy is actually investing in our economy and locking in a tax plan that slows the future growth of state government."

Some Democrats say they are open to Sanford's plan but first want to see the state's revenue on income taxes increase.

"We need to grow back [state revenues] before we start any more tax reductions," said Sen. John Land, D-Manning. "Tax reductions got us in the problem that we're in."

House Minority Leader James Smith, D-Columbia, said it would be better to have an income-tax reduction in a more robust economy.