Dear Members of the Oklahoma House of Representatives,
On behalf of National Taxpayers Union’s (NTU) Oklahoma members, I urge you to reject HB 1841 sponsored by Chairwoman Leslie Osborn. If enacted in its current form, the bill would amount to a massive tax hike on Oklahomans.
The bill would raise cigarette taxes by $1.50 – from $1.03 to $2.53 per pack. Cigarette taxes are highly regressive, affecting low income earners far more than high income earners.
By raising the cigarette tax to $2.53 per pack, Oklahoma would have one of the highest levies in the country – well above the national average of $1.69 per pack. Taxes in the neighboring states of Texas, Kansas, Arkansas, and New Mexico would remain significantly lower. This would create an incentive for black market purchases or for cross-border sales of tobacco products from neighboring states. Raising the cigarette tax will further exacerbate this problem.
Finally, raising cigarette taxes – a declining source of revenue – to pay for permanent spending is a misguided budgetary practice. Cigarette taxes usually yield far lower revenue than initially projected; as the National Conference of State Legislatures has demonstrated, “cigarette taxes are not a stable source of revenue.” Indeed, a 2013 study by NTU’s research arm, National Taxpayers Union Foundation, found that revenue projections were met in only 29 of 101 cases where cigarette and tobacco taxes were raised between 2001 and 2011.
Given the enormous problems with HB 1841, NTU urges all members of the Oklahoma House of Representatives to reject it.
Counsel and Government Affairs Manager