New York Governor Paterson must not think that anyone who lives and shops in New York pay enough in taxes. But if you disagree with Governor Paterson, click here.
After proposing 125 separate tax hikes on products and services we use everyday in an attempt to close a $10 billion budget gap that is the result of huge state spending increases over the last decade, the Empire State’s hapless governor is at it again; Paterson has proposed to substantially increase the state’s tobacco tax rates on cigarettes and other tobacco products. Specifically, he wants to raise the state’s cigarette tax by $1.60, which will impose a $440 million tax increase on the people of New York. This is on top of nearly $10 billion in various tax hikes enacted since last year. . Of course, this does not include the federal cigarette tax that already applies to everyone in the United States. If the Legislature approves this tax in a vote expected on Monday, the state would go from having the fourth highest cigarette tax rate in the nation at $2.75 per pack to the highest at $4.35 a pack. Paterson also proposes to increase the tax on other tobacco products like chewing tobacco to, according to the New York Times, “[bring] the tax on those products more in line with those of cigarettes.”
Those who live and shop in New York City will feel an even harder pinch. New York City levies its own very high tobacco taxes, so anyone who buys a pack within the five boroughs – from the Wall Street trader to the Brooklyn writer – will pay $5.85 before paying for the tobacco or paper used to make the cigarette. Some consumers will pay as much as $10 just in taxes for certain brands of cigarettes.
If Governor Paterson and the tax and spenders in the Legislature think that a $440 million tax hike is going to solve their $9 billion problem, they should think again. Cigarette and other sin taxes are notorious for their inability to raise promised revenue. Paterson need not look further than across the Hudson River for an example of this problem, as New Jersey came up $52 million short following a tobacco tax hike. High tobacco taxes tend to drive sales to lower tax jurisdictions, such as other states and the black market. Now that New York will have the highest taxes in the nation, smokers need only hop on the PATH to New Jersey, Metro North to Connecticut, or drive to Pennsylvania, Massachusetts, or Vermont to buy their cigarettes.
No one argues that New York is in the midst of a crisis. But the problem is that the state government has a spending, not a revenue, problem. As NTU has reminded the Governor and other tax and spenders in Albany, in the past decade, New York state spending has skyrocketed by $35 billion, outstripping inflation by $21 billion and personal income growth by $17 billion. New York can fix its broken budget by restraining spending, not by adding on to an already very heavy tax burden.
Just a few months ago, Paterson wanted to raise the cigarette tax by $1 per pack. The proposal did not go very far in the State Senate, where Republicans, who have been standing fast against tax hikes, joined with Democrats who have been listening to their overburdened constituents, to oppose that tax increase. But now Paterson is going to put the proposal into an emergency budget bill, so that he can spin a vote against a tax hike as a vote to shutdown the government. New Yorkers won’t fall for that charade and neither should lawmakers. But it wouldn’t hurt to remind lawmakers, especially those in the State Senate, of their prior opposition to tobacco the tax hike and the need for spending restraint. You can join fellow New Yorkers in speaking out against this tax hike by clicking here.