(Alexandria, VA) – Last night's vote in the New York State Legislature to impose another $440 million tobacco tax hike will prove to be a failure in more ways than one, according to the National Taxpayers Union (NTU), America's oldest non-partisan grassroots taxpayer group. NTU has 362,000 members nationwide and more than 18,000 in New York.
The tobacco tax hike, originally proposed by Governor David Paterson, would raise the state's cigarette tax by $1.60, increasing the current tax rate from $2.75 to $4.35 per pack of cigarettes. This means New York will have the highest state cigarette tax rate in the nation. The package will also boost tax levels on other tobacco products, such as moist snuff and cigars. New York City residents, who must also pay local tobacco taxes, should expect to fork over no less than $5.85 in taxes before they pay for the tobacco and paper in the cigarettes.
John Stephenson, NTU's State Government Affairs Manager, says, "The New York State Legislature's party-line vote to raise the cigarette tax by $1.60 is both irresponsible and shameful, and not a solution to the budget crisis gripping the Empire State. Cigarette taxes are an unstable source of revenue, notorious for their inability to raise the promised money. Additionally, they disproportionately weigh on the poor, who are more likely to smoke. Once again the State Legislature has ignored fiscal reality and instead has decided to make consumers and businesses pay for its reckless overspending."
Stephenson pointed out that New Jersey and the District of Columbia both reported shortfalls of $52 million and $7 million, respectively, following recent increases in their tobacco tax rates. "The problem with cigarette taxes," Stephenson says, "is that as the rate rises, the retail price increases and outlets in New York are put to a greater competitive disadvantage. The state will lose tax revenues as residents and visitors buy less in New York and more in neighboring jurisdictions with lower taxes."
Stephenson concludes, "New Yorkers already have to pay the third-highest state and local tax burden in the nation. It makes no sense for the State Legislature to pile more onto such a heavy load, especially in a down economy. Unless Governor Paterson and the State Legislature agree to significantly reduce state spending and reform the burdensome tax code, residents are in for even tougher times ahead."
NTU is a nonpartisan, nonprofit citizen organization founded in 1969 to work for lower taxes, smaller government, and economic freedom at all levels. Note: For more information on NTU, visit www.ntu.org or text the word "FIGHT" to 67292.