DearChairman Enns and Members of the Committee,
On behalf of the National Taxpayers Union’s (NTU)’s nearly 4,700 members inOklahoma, I urge you to reject HB 2135, which would eliminate the state’spreemption on local authority to regulate tobacco. Although proponents claimthis legislation will enable municipal governments to promote economicdevelopment through healthy workforce initiatives - in reality HB 2135 includeslanguage that could lead to burdensome regulations and higher tobacco taxes atthe local level. This in turn would actually harm economic developmentdue to higher tax burdens on low-income Oklahomans and small retailers in theSooner State.
Needy Oklahomans are more likely to smoke, so they will disproportionately feelthe impact of any increase in cigarette taxes. A 2007 study by the HeritageFoundation showed that more than one-fourth of people who smoke live below thefederal poverty line and another quarter of all smokers live within 100-200percent of the poverty line. A higher tobacco tax of even a few cents per packwould be a substantial additional expense for these citizens, especiallyconsidering that Oklahomans already pay the nation’s 19th-higheststate and local tax burden as a percentage of income – a heavier load thancitizens bear in the neighboring states of Colorado, Kansas, Missouri, NewMexico, and Texas.
Sales of cigarettes and other tobacco products also comprise a substantialportion of business for small retailers. The National Association ofConvenience Stores reports that cigarettes account for about one out of everythree dollars of total sales nationwide at their establishments. If local governmentsraise cigarette taxes, Oklahoma’s retailers in towns such as Blackwell,Sallisaw, and Marietta could lose business to competitors in Kansas, Arkansas,and Texas. Ironically, this will deprive the state and local governmentsof revenues. This is not idle speculation. Higher tobacco taxes at thelocal level have cost New York City and the District of Columbia millions inforegone tax collections and increased cigarette smuggling.
Economic development is a worthy goalfor Oklahoma’s state and local governments, and NTU generally supports lawsallowing municipalities the flexibility to innovate with competitive fiscalpolicies. However, laws that expand public officials’ authority to raise taxesand impose onerous regulations will not create more jobs or enhance theprosperity of citizens. Therefore, our members hope that you will stand forreal economic development and against higher taxes by opposing HB 2135.
Sincerely,
John Stephenson
State GovernmentAffairs Manager