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Does NC really want a cigarette tax hike?



February 27, 2011

The Fay Observer reports that a new poll released by the North Carolina Alliance for Health shows Tar Heels appear to overwhelmingly support a $1 per pack tax increase on cigarettes to help close the state’s budget deficit. According to a news release from the Alliance:

 

“While 62 percent support increasing the tobacco tax as a budget balancing measure, support jumps to 66 percent when some of the revenue is used to fund public health measures. Strong majorities opposed other options such as reducing funding for education, Medicaid health services, closing state prisons or increasing other taxes.”

 

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

 

While these numbers may sound impressive, they overlook some relevant facts. First, cigarette taxes are notoriously unreliable sources of 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 result from higher taxes as smokers seek out cheaper alternatives from other lower-tax jurisdictions or smugglers. Second, there is no guarantee 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 suggests that tobacco tax hikes are prelude to other tax increases. If the pollster had mentioned these facts, I’m fairly certain the poll would produce a different result. 

In my view, one poll is not a good indicator of the overall mood among the public. A poll is a snapshot of public opinion at the time. A much better indicator is election results. Last November, North Carolina voters choose Republican majorities in both 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.


 

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