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An Open Letter to the Wyoming Legislature: Stand Against Tax Hikes, Reject HB 282
On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, I write to express our strong opposition to HB 282. This misguided legislation would raise taxes by an estimated $9.3 million annually by hiking the state cigarette excise tax. Although proponents of these tax increases claim they are good public policy, in reality such taxes disproportionately burden lower income consumers and small retailers while providing an unreliable stream of revenue. We therefore urge you to stand with taxpayers and oppose this legislation.
This proposal would permanently raise the state excise tax on cigarettes to $1.10, which would constitute a near 100 percent increase over the current rate. For a pack a day smoker, they will be paying an additional $200 annually to the state with the new tax increase. To that end, excise taxes are regressive because they most negatively impact low-income tobacco users. Based on data from the Centers for Disease Control and Prevention, 31 percent of Wyoming residents earning less than $15,000 annually are smokers. That means those who will feel the most pinch in their pockets are those with already limited financial means.
Small businesses would be adversely affected by the unfair tax burden of HB 282, particularly for stores near Wyoming's border. The National Association of Convenience Stores reports that cigarette sales account for about one out of every three dollars of total sales nationwide at their establishments. The proposed cigarette tax hike is certain to drive more dollars out of Wyoming to nearby Idaho, Colorado, and Nebraska to buy less expensive cigarettes. While shopping out of state, consumers are also likely to purchase gas, food, and other items that help to grow state economies.
While it is true that cigarette tax increases usually correspond with a short-term bump in revenue, after a few years it drops precipitously due to smuggling or declines in smoking rates. The Fiscal Note for HB 282 estimates a static increase in revenues, but as we’ve seen in nearly every case, these revenue projections often come up short. In fact, a 2013 study from NTU’s research arm, National Taxpayers Union Foundation, found 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.
The facts are clear; cigarette excise tax hikes hurt the poor and are fool’s gold for governments as a way to raise revenue. We urge you to vote “no” on HB 282 when this legislation comes up for a vote.
Policy and Government Affairs Associate