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Hiking Mississippi's Cigarette Tax Would Harm State's Poorest Residents, Non-Smokers, Taxpayer Group Finds

by Pete Sepp / /

(Alexandria, VA) -- Mississippi lawmakers already are counting on growing government by using one unstable funding source -- federal stimulus funds -- and should not further jeopardize the state's struggling economy by hiking its moderate cigarette tax to a much higher rate than its neighbors. That's the assessment of the 362,000-member National Taxpayers Union (NTU), which has more than 2,100 Mississippi members.

"Federal taxpayers across the country are footing a more than $1.6 billion stimulus bill for Mississippi, yet Gov. Haley Barbour, Lt. Gov. Phil Bryant, and Members of the State Legislature are looking for ways to continue the overspending that helped put the state into a downward economic spiral -- including a state cigarette tax hike of up to $1 per pack," NTU State Government Affairs Manager Josh Culling said. "This destructive policy slams the very same taxpayers the stimulus package purported to save." Culling noted four major reasons cigarette taxes are bad for Mississippi's economy:

  • Cigarette taxes are regressive. A cigarette tax hike would disproportionately harm the state's low-income population during a devastating recession. Mississippi smokers' median annual household income is about $10,200 per year less than that of the state's non-smokers. On average, about 43 percent of Mississippi smokers have household incomes less than $25,000.
  • Washington just increased the federal excise tax by 62 cents per pack. The increase in the federal tax will be paid for by working Mississippians 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. The cigarette tax is 36 cents per pack in neighboring Louisiana; 42.5 cents in Alabama; 59 cents in Arkansas; and 62 cents in Tennessee. Raising the price of a pack of cigarettes in Mississippi promises not only to repel out-of-state consumers, but drive state residents over the 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. With Mississippi per-capita spending hikes under Gov. Barbour averaging over 8 percent annually, more deficits seem all the likelier.

"It seems politicians in Jackson are not content with begging for federal money financed by taxpayers across the country -- via a cigarette tax increase, they intend to punish 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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