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NTU urges Washington State Legislators to oppose tobacco tax hikes

by Brandon Arnold / /

Dear Legislator:

On behalf of National Taxpayers Union’s members in Washington, I urge you to oppose Senate Bill 5808, which would raise taxes on cigarettes and other tobacco products. Although supporters of this tax hike claim that high cigarette taxes are good public policy, the reality is that such taxes disproportionately burden the poor and small retailers while providing an unreliable stream of revenue.    

Because Washington’s low-income residents are more likely to smoke, they would be hit hardest by the proposed 17 percent 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. Raising taxes on cigarettes and other tobacco products would place a heavier burden on these individuals and families, who are struggling to get ahead in a still-fragile economy.

The proposed tax hikes would also harm small businesses. The National Association of Convenience Stores reports that cigarettes account for about 1 out of every 3 dollars of total sales nationwide at their establishments. When out-of-state customers pick up cigarettes, they often buy gas, food, and other items that help to grow Washington’s economy.

Moreover, Washington’s high tax rate – currently the sixth-highest in the nation – has created a large black market for cigarettes. According to a study by the Tax Foundation, 48 percent of the cigarettes smoked in the state are smuggled in from other states. That’s the fourth-highest rate in the country, one which would likely increase even further if tobacco taxes increased.

Additionally, history has shown that revenue projections from cigarette tax increases often come up short. According to a 2013 study from National Taxpayers Union Foundation, roughly 7 out of every 10 state-level tobacco tax hikes enacted between 2001 and 2011 resulted in lower-than-anticipated revenues. All too often, this meant additional levies were soon to follow. In fact, our study found that 66 out of 96 tobacco tax hikes were followed by additional hikes within two years.

As your constituents deal with the ongoing slow economic recovery, smokers and non-smokers alike would be best- served by avoiding a tax hike on tobacco products. Instead, Washington’s leaders should look to reform the tax system to lessen economic burdens on the poor, lower costs for small businesses, and reduce reliance on unstable sources of revenue.

Sincerely,

Brandon Arnold
Executive Vice President