Government Bytes


Does NC really want a cigarette tax hike?

by John Stephenson / /

The Fay Observerreports that a new poll released by the North Carolina Alliance for Healthshows Tar Heels appear to overwhelmingly support a $1 per pack tax increase oncigarettes to help close the state’s budget deficit. According to a newsrelease from the Alliance:


“While62 percent support increasing the tobacco tax as a budget balancing measure,support jumps to 66 percent when some of the revenue is used to fundpublic health measures. Strong majorities opposed other options such asreducing funding for education, Medicaid health services, closing state prisonsor increasing other taxes.”


The Alliancealso said the tax hike would generate $338.4 million in new revenue.


While thesenumbers may sound impressive, they overlook some relevant facts. First, cigarette taxes are notoriously unreliable sourcesof revenue. The projection that North Carolina will see a windfall of more than$300 million does not account for the losses of revenue that will surely resultfrom higher taxes as smokers seek out cheaper alternatives from other lower-taxjurisdictions or smugglers. Second, there is noguarantee that the revenue raised will go to health care or any specific program. In many cases, state officials frequently divert tobacco tax revenues for uses other than their intended purpose. Third, history suggeststhat tobacco tax hikes are prelude to other tax increases. If the pollsterhad mentioned these facts, I’m fairly certain the poll would produce adifferent result. 

In my view, one poll is not a goodindicator of the overall mood among the public. A pollis a snapshot of public opinion at the time. A much better indicator iselection results. Last November, North Carolina voters choose Republican majorities inboth houses of the State Legislature for the first time since Reconstruction.Most importantly, those majorities campaigned on a platform to forego from or reduce higher taxes. This stunning result would appear to suggest that Tar Heels are not keen on tax hikes.