DearLegislator:
On behalf of the National TaxpayersUnion’s 2,500 members in Idaho, I urge you to reject legislation that wouldraise the tax for a pack of cigarettes by $1.25 (to more than triple thecurrent level) and impose an additional 25 percent tax on other tobaccoproducts. While proponents claim tobacco tax hikes are a “win” for Idahotaxpayers, the reality is that these punitive schemes rarely, if ever, producethe promised revenue and are burdensome to small businesses and the poor.
Despite fanciful claims to the contrary,many tobacco tax hikes across the country have failed to produce the promisedrevenue. New Jersey reported a $52 million shortfall in tobacco tax revenuesafter it raised its cigarette tax by 17.5 cents. Subsequent to boosting itscigarette tax by 50 cents in 2009, the District of Columbia reported that itcollected $15 million less than expected, and $7.6 million less than itcollected prior to the tax hike.Other states, including Arkansas, Maryland, Mississippi, and Rhode Island, havealso reported gaps in revenue collections following tobacco tax hikes.
Furthermore, tobacco products accountfor roughly one out of every three dollars in sales for convenience storesnationwide, according to the National Association of Convenience Stores. Ahigher tobacco tax would add to the cost of their products, jeopardizing thecash flow of these establishments within Idaho. Raising these taxes would alsoall but eliminate the competitive advantage Idaho businesses enjoy overneighboring states that currently levy far higher tobacco taxes such asWashington and Montana.
Moreover, since the poor are more likelyto smoke, they will disproportionately feel the impact of an increase in thetobacco tax. If enacted, this proposal would cost a person who smokes a pack aday more than $450 in additional taxes per year. Raising a tax that threatensto curtail commercial activity (thereby shrinking the revenue base) and heavilyburdens the poor makes no economic sense.
Rather than increasing a regressive tax,we urge the Legislature to continue pursuing ways to trim wasteful spending andprotect taxpayers. Doing so will protect Idaho’s businesses and avoid additionalburdens on the poor. We look forward to working with you to enact common-sensereforms that do not include damaging tax hikes.
Sincerely,
Andrew Moylan
Vice President of GovernmentAffairs