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Oppose Burdensome Regulations and Higher Tobacco Taxes in House Bill 2135!
An Open Letter to the Oklahoma House Committee on Public Health:
February 14, 2011
Dear Chairman Enns and Members of the Committee,
On behalf of the National Taxpayers Union’s (NTU)’s nearly 4,700 members in Oklahoma, I urge you to reject HB 2135, which would eliminate the state’s preemption on local authority to regulate tobacco. Although proponents claim this legislation will enable municipal governments to promote economic development through healthy workforce initiatives - in reality HB 2135 includes language that could lead to burdensome regulations and higher tobacco taxes at the local level. This in turn would actually harm economic development due to higher tax burdens on low-income Oklahomans and small retailers in the Sooner State.
Needy Oklahomans are more likely to smoke, so they will disproportionately feel the impact of any increase in cigarette taxes. A 2007 study by the Heritage Foundation showed that more than one-fourth of people who smoke live below the federal poverty line and another quarter of all smokers live within 100-200 percent of the poverty line. A higher tobacco tax of even a few cents per pack would be a substantial additional expense for these citizens, especially considering that Oklahomans already pay the nation’s 19th-highest state and local tax burden as a percentage of income – a heavier load than citizens bear in the neighboring states of Colorado, Kansas, Missouri, New Mexico, and Texas.
Sales of cigarettes and other tobacco products also comprise a substantial portion of business for small retailers. The National Association of Convenience Stores reports that cigarettes account for about one out of every three dollars of total sales nationwide at their establishments. If local governments raise cigarette taxes, Oklahoma’s retailers in towns such as Blackwell, Sallisaw, and Marietta could lose business to competitors in Kansas, Arkansas, and Texas. Ironically, this will deprive the state and local governments of revenues. This is not idle speculation. Higher tobacco taxes at the local level have cost New York City and the District of Columbia millions in foregone tax collections and increased cigarette smuggling.
Economic development is a worthy goal for Oklahoma’s state and local governments, and NTU generally supports laws allowing municipalities the flexibility to innovate with competitive fiscal policies. However, laws that expand public officials’ authority to raise taxes and impose onerous regulations will not create more jobs or enhance the prosperity of citizens. Therefore, our members hope that you will stand for real economic development and against higher taxes by opposing HB 2135.