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Cigarette Tax Hike Would Harm Florida's Economy, Smokers and Non-Smokers Alike, Taxpayer Group Finds

by Pete Sepp / /

(Alexandria, VA) -- Florida Gov. Charlie Crist (R) is already counting on growing government using one unsustainable funding source -- federal stimulus funds -- and should not further jeopardize the state's struggling economy by hiking cigarette taxes. That's the assessment of the 362,000-member National Taxpayers Union (NTU), which has more than 24,000 Florida members.

"Florida stands to receive as much as $13 billion in federal stimulus funds, yet the Governor and Members of the State Legislature are looking for a politically expedient pot of cash -- including up to a $1.00 per-pack increase in the state cigarette tax -- to continue the rapid government expansion that got the state into the economic mess it's in," NTU State Government Affairs Manager Josh Culling said. "Unfortunately, cigarette tax hikes achieve the unholy trifecta of destructive economic policy, and slams the very same taxpayers the stimulus package purported to save." Culling noted four major reasons cigarette taxes are bad for Florida's economy:

  • Cigarette taxes are regressive. A cigarette tax hike would disproportionately harm the state's low-income population during a devastating recession. Florida smokers' median household income is almost $10,000 per year less than that of the state's non-smokers. Cigarette taxes also consume a greater percentage of poor Floridians' income -- up to 5 percent of household income in the state's poorest counties.
  • Washington just increased the federal excise tax (FET) by 62 cents per pack. The increase in the federal tax will be paid for by working Floridians struggling to make ends meet. To add more to their burden during a recession is unconscionable.
  • Higher cigarette taxes will drive out-of-state purchases. Cigarette taxes in neighboring Georgia and Alabama are 37 cents and 42.5 cents per pack, respectively. Raising the price of a pack of cigarettes in Florida promises not only to repel out-of-state consumers, but drive Florida citizens over the state border where prices are lower.
  • Cigarette tax hikes lead to other tax increases down the road. A decrease among in-state cigarette purchases goes hand-in-hand with a reduction in tax revenues, leaving another gaping budget hole in the future. Between FY 2002 and FY 2007, state cigarette taxes were increased 57 times. Thirty-nine of those increases yielded revenues that fell short of projections.

"It seems politicians in Tallahassee are not content with begging for federal money financed by taxpayers across the country -- via a cigarette tax increase, they intend to soak their constituents as well," Culling concluded. "A cigarette tax hike isn't only unnecessary -- it is highly destructive economically, whether you smoke or not."

NTU is a nonpartisan, nonprofit citizen organization founded in 1969 to work for lower taxes, limited government, and economic freedom at all levels. Note: For more information, visit www.ntu.org.

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