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New Study: Tobacco Taxes Cause, Don’t Solve, Budget Dilemmas
For Immediate Release August 1, 2013
Douglas Kellogg, (703) 683-5700
Pete Sepp, (703) 683-5700
(Alexandria, VA) – Today, National Taxpayers Union Foundation (NTUF) released a new study on the fiscal impacts of tobacco taxes, revealing that these measures overwhelmingly fail to meet revenue projections, lead to more taxes in other areas, and do not correlate with strong economic growth.
“The evidence starkly shows taxes on tobacco products resemble a weak budgetary crutch whose frequent collapse leaves this fiscal burden to fall on all taxpayers and consumers,” said study author Diana Oprinescu. “These levies are continually associated with high tax states that are struggling economically.”
The major highlights include:
Cigarette tax hikes lead to different types of tax increases, fail to meet revenue projections.
Tobacco tax revenues are rarely used to reduce other taxes.
States with high cigarette tax rates have tax burdens an average of $1,356 above the national average.
These types of tax increases are not associated with strong economic growth.
Oprinescu concluded, “Ultimately our research shows that the downsides of punitive fiscal policy and reactive budget management are present no matter the political convenience of a particular tax.”
NTUF is the research affiliate of the 362,000-member National Taxpayers Union, a non-profit taxpayer advocacy group founded in 1969. More information is available at ntu.org/ntuf.