DearLegislator:
Onbehalf of the National Taxpayers Union’s (NTU’s) 4,000 members in Alabama, Iurge you to reject HB 27 and HB 9, which would raise Alabama’s cigarette tax by32.5 cents and $1 per pack, respectively. Passage of punitive tax hikes willonly increase burdens on hard-working citizens, harming the fragile economicrecovery while failing to address the state’s overspending problems.
HB27, sponsored by Representative Patricia Todd, would raise the state cigarettetax by 32.5 cents a pack, costing Alabamians $75 million per year. This billwould place the state’s cigarette tax well above that of neighboringMississippi, Tennessee, and Georgia, encouraging cross-border sales that arecommon in many areas of the country. HB 9 is even more damaging for consumers, raisingthe tobacco tax by $1 per pack and imposing an additional $230 million burdenon largely working- and middle-class families. This legislation would boostAlabama’s tax rate past every one of its neighbors, including Florida.
Whileboth bills are being portrayed as necessary responses to Alabama’s $400 millionoverspending problem, the truth is that many tobacco tax hikes across thecountry have failed to produce the promised revenue. New Jersey reported a $52million shortfall in tobacco tax revenues after it raised its cigarette tax by17.5 cents. Subsequent to boosting its cigarette tax by 50 cents in 2009, theDistrict of Columbia reported that it collected $15 million less than expected,and $7.6 million less than it collected priorto the tax hike. Even worse for taxpayers, a 2008 NTU study showed that 41of 59 state tobacco tax increases from 2001-2006 were followed by moreexpansive tax hikes within two years, as states attempted to make up fortobacco revenue that never materialized.
Moreover,since moderate-income Americans are more likely to smoke, they will disproportionatelyfeel the impact of an increase in the tobacco tax. If enacted, this proposalwould cost a person who smokes a pack a day as much as $365 in additional taxesper year. Raising a tax that threatens to curtail commercial activity (therebyshrinking the revenue base) and strains many families’budgets makes no economic sense.
Ratherthan increasing a regressive tax, we urge the Legislature to continue pursuingways to trim wasteful spending. Doing so will spare Alabama’s consumers andbusinesses from considerable harm while avoiding additional burdens on strugglinghouseholds. We look forward to working with you to enact common-sense reformsthat do not include damaging tax hikes.
Sincerely,
Brent Mead State Government Affairs Manager