Kelly William Cobb

Arkansas Gov. Beebe Proposes $88 Million Tax Hike on Cigarettes and Tobacco Products


Posted by Kelly William Cobb on Thursday, January 15th, 2009, 12:00 PM PERMALINK


In his State of the State address this week, Arkansas Gov. Mike Beebe (D) proposed increasing the cigarette tax by 56-cents to $1.15 per pack. His proposal also calls for raising the tax on smokeless tobacco products.  If passed, the proposed tax hike will cost consumers $87.8 million, which the governor plans to spend on expanded government healthcare programs.  Due to the state's supermajority requirement, the proposal will need the support of 3/4 of legislators in each chamber.

Below is ATR's press release on the Arkansas tax hike.  Also check out ATR's letter to republican legislators and letter to democrat legislators urging opposition to the cigarette tax.

In his State of the State address this week, Arkansas Gov. Mike Beebe (D) proposed increasing the cigarette tax by 56-cents to $1.15 per pack. The proposal also calls for raising the tax on smokeless tobacco products.
 
Under the Arkansas Constitution, the tax hike would require a three-fourths majority vote in each chamber before becoming law. The proposal is also a violation of the Taxpayer Protection Pledge, which six Arkansas lawmakers have taken to oppose any and all tax increases.
 
If passed, the governor estimates the tax hike will cost consumers and taxpayers $87.8 million, which he plans to spend on state healthcare programs. However, Gov. Beebe’s attempt to raise tobacco taxes will likely do little to bring in more revenue. For example, when New Jersey raised the cigarette tax last year by 17.5 cents, far below Gov. Beebe’s proposal, the state actually lost $22 million in tax revenue from cigarette sales. During his State of the State address, Gov. Beebe even acknowledged that “tobacco taxes are a dwindling revenue stream.”
 
“Time and time again tax hikes on cigarettes and tobacco products result in lower than anticipated revenue collection,” said Grover Norquist, president of Americans for Tax Reform. “If Governor Beebe promises millions in new spending, knowing full well that taxing cigarette consumers will not raise enough money, he will come right back to the legislature and ask them to raise taxes again. This tax hike is just a recipe for future tax hikes.”
 
Gov. Beebe’s proposal would also push Arkansas’s cigarette tax well beyond the rate in bordering states, which collectively average 63-cents. After Maryland raised the tobacco tax last year, the state saw a 254% increase in illegal cross-border cigarette smuggling from consumers who purchased products in neighboring states with lower tax rates. This also resulted in a 25% drop in cigarette sales and a subsequent decline in tobacco tax revenue.
 
“Raising the cigarette tax beyond that of every bordering state essentially amounts to the Governor telling consumers to pay their taxes elsewhere,” added Norquist. “That is certainly not the way for the governor to fund his costly new big-government programs.”
 
Click here for the full PDF of the press release.
 

 

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Utah Gov. Huntsman Proposes Highest Cigarette Tax Increase in Nation's History


Posted by Kelly William Cobb on Tuesday, January 13th, 2009, 12:00 PM PERMALINK


Facing a $345 million overspending problem, Utah Governor Jon Huntsman proposed increase the cigarette tax by $2.30 per pack - the largest single tax hike on cigarettes in the nation's history.  The proposal would also give Utahans the highest cigarette tax in the country.

In response, ATR sent a letter to all Utah legislators and the Governor expressing opposition to the tax hike.  Click here to read the letter.

Below is ATR's press release on the Governor's proposed tobacco tax.

Facing $345 million in overspending this year, Utah Gov. Jon Huntsman (R) has proposed increasing the cigarette tax from $0.70 to $3.00 per pack. If passed, the governor’s proposal would be the largest single tax hike on cigarettes in the nation’s history and would give Utahans the highest cigarette tax in the country. The proposal will also do little to make up the state’s budget shortfall and will likely increase illegal smuggling of cigarettes across state lines.
 
Under the Governor’s proposal, the $2.30 cigarette tax hike would be partially offset by eliminating the state’s grocery tax, currently set at 1.75%. However, the cigarette tax hike is expected to raise $150 million, far above the estimated $75 million revenue cut from the grocery tax, making the proposal a net tax increase. As such, the proposal is a violation of the Taxpayer Protection Pledge, a Pledge that fourteen Utah lawmakers have taken to oppose any and all tax increases, unless the tax hike is accompanied by a tax cut of an equal amount to make it revenue neutral.
 
“Trying to sell a tax hike as a tax cut on groceries is simply disingenuous,” said Grover Norquist, president of Americans for Tax Reform. “Governor Huntsman’s proposal will result in drastically higher taxes on Utah consumers to make up for hundreds of millions of dollars in government overspending this year.”
 
The tax hike proposal will push Utah’s current tax rate far beyond that of neighboring states, resulting in illegal smuggling of cigarettes across borders and reducing actual tax revenue to levels far below projections.  After Maryland raised the tobacco tax last year, the state saw a 25% drop in cigarette sales and a sharp decline in cigarette tax revenue from consumers who purchased products in nearby states with lower rates. During the first half of last year, Maryland also recorded a 254% increase in illegal cross-border cigarette smuggling, mostly because Maryland’s cigarette tax rate is $1.70 higher than neighboring Virginia. Gov. Huntsman’s proposed cigarette tax is $2.04 per pack over the neighboring state average of $0.96.
 
“Such a drastic increase in Utah’s cigarette tax will surely drive consumers to surrounding states with lower rates,” added Norquist. “Tax rates may be contained within state borders, but consumer decisions are not. Far too often, smokers are unfairly targeted to cover state overspending problems and they respond by simply finding cheaper products elsewhere.”
 
For a PDF version of the press release, click here.
 

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Tax Hike on Cigarettes will Not Solve Virginia Budget Crisis


Posted by Kelly William Cobb on Tuesday, December 16th, 2008, 12:00 PM PERMALINK


Below is ATR's press release opposing Virginia Governor Kaine's proposed doubling of the cigarette tax to make up for billions in government overspending.

Facing $2.9 billion in government overspending this year, Virginia Gov. Tim Kaine (D) is expected to propose doubling the state cigarette tax tomorrow as part of a package to balance the state budget. If passed, the cigarette tax would rise to 60-cents per pack - the largest single tax increase on cigarette consumers in Virginia’s history.
 
Attempting to solve the state’s budget crisis with a tax increase would be a violation of the Taxpayer Protection Pledge, which 8 State Senators and 22 House Members in Virginia have signed to oppose any and all efforts to increase taxes.
 
Critics contend that Governor Kaine’s attempt to solve the state’s overspending problem with a tobacco tax increase will do little to bring in more revenue. Of the near 60 tobacco tax increases around the country since 2003, very few actually met their targets for anticipated revenue. For example, New Jersey raised the cigarette tax just 17.5 cents in 2007 expecting to bring in an additional $30 million. In actuality, the state lost $22 million in tax revenue from cigarette consumers, contributing the current $1.2 billion deficit. Similarly, when Maryland doubled the cigarette tax last year to cover a budget projection shortfall, cigarette sales dropped nearly 25%.
 
“Evidence from almost every state that has unfairly targeted smokers to solve overspending problems shows that cigarette taxes simply do not bring in that much revenue,” said Grover Norquist, president of Americans for Tax Reform. “Doubling the tobacco tax in Virginia will just drive consumers to bordering states with lower rates, like North Carolina, Kentucky, and West Virginia. Sending consumers to pay taxes elsewhere will certainly not solve the problem.”
 
Cigarette taxes can also hit small businesses and personal income necessary to sustain economic growth. Tax hikes on common products like cigarettes, which comprise 34% of convenience store sales, can have larger effects on the broader economy. In fact, the U.S. Congressional Joint Committee on Taxation reduces the gross revenue of cigarette tax increases by 25% just to account for subsequent reductions in income and payroll taxes.
 
“The only thing tax hikes do during an economic downturn is help impede any further growth and defer needed reform,” added Norquist. “The Governor’s tax hike is just a way to paper over the need to set real budget priorities rather than a viable solution to the state’s funding woes.”

Click here for a PDF version of the press release.

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Kentucky Gov. Beshear Proposes Tax Hike on Cigarettes to Cover Overspending Problem


Posted by Kelly William Cobb on Friday, December 12th, 2008, 12:00 PM PERMALINK


Kentucky Governor Steve Beshear has proposed a massive tax hike on cigarette consumers.  In response, ATR sent a letter to all Kentucky Taxpayer Protection Pledge signers urging their opposition to the Governor's proposal.  Click here to read the letter.

Below is ATR's press release on the Kentucky tobacco tax.

Facing $456 million in government overspending this year, Kentucky Gov. Steve Beshear (D) yesterday called on the legislature to adopt a 70-cent per pack tax hike on cigarettes in the upcoming legislative session. If passed, the measure would raise the cost of an average pack of cigarettes to over $4.50 and double the tax charged on other tobacco products.
 
According to Gov. Beshear’s office, the tobacco tax is estimated to generate $81.5 million for the state. The Governor’s statement calls these tax hikes are a “reliable source of revenue” that are more predictable than other revenue sources. However, of the 57 tobacco tax increases around the country between 2003 and 2007, very few actually met targets for anticipated revenue. For example, New Jersey raised the cigarette tax just 17.5 cents in 2007 expecting to bring in an additional $30 million. In actuality, the state lost $22 million in tax revenue from tobacco consumers, contributing the current $1.2 billion deficit.
 
“Evidence from nearly every state that has unfairly targeted smokers to solve self-inflicted budget problems completely contradicts Governor Beshear’s claim that cigarette taxes bring in more revenue,” said Grover Norquist, president of Americans for Tax Reform. “The talking points Governor Beshear received from coercive utopian health advocacy groups are baseless and completely disconnected from real world data.”
 
The Governor’s proposed tax hike would also push Kentucky’s tobacco tax to $1.00 per pack; well beyond Kentucky’s neighboring states, which average 69.5-cents per pack. In a similar situation, Maryland doubled the cigarette tax last year to cover a budget projection shortfall. However, cigarette sales dropped nearly 25%, failing to fix the state’s budget woes, after consumers drove to nearby states with lower tax rates.
 
“Such a substantial increase in tobacco taxes will only drive consumers to surrounding states with lower tax rates and increase the smuggling of cigarettes across state lines,” added Norquist. “The Governor should understand that the single worst way to solve the state’s overspending problem is to send consumers to pay taxes elsewhere.”
 
For a PDF version of the press release, click here.

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Florida Weighs Tobacco Tax Increase


Posted by Kelly William Cobb on Wednesday, November 26th, 2008, 12:00 PM PERMALINK


Florida Governor Charlie Crist and members of the legislature have been weighing an increase in the cigarette tax to cover up the state's $2.14 billion overspending problem.  While initial reports put the tax hike at 50-cents per pack, the number is subject to change.  Additionally, proponents of the tax hike have falsely been labeling it as a "user fee" to court votes in the Florida legislature.

Click here for a full PDF version of the letter or read the letter below.

Dear Governor Crist and Members of the Florida Legislature,
 
As Florida faces serious budgetary challenges, it is critical now more than ever to oppose attempts to increase taxes. In the face of a slowing economy, tax hikes will hit hardworking Florida families and consumers the hardest and further diminish the state’s economic growth.
 
A recent proposal under consideration calls for a 50-cent hike in Florida’s cigarette tax. Too often, policymakers attempt to disguise excise tax increases as “user fees”. This is another example of such disingenuousness. An income tax is not a user fee on your job. A sales tax is not a user fee on purchasing products. The same holds true for an excise tax on tobacco - a tax increase is a tax increase no matter what you call it.
 
Additionally, evidence from other states proves that this tax hike will do little to address the state’s current $2.14 billion overspending problem.  After New Jersey raised the cigarette tax just 17.5 cents in 2007, the state lost $24 million in tobacco tax revenue from consumers who sought cheaper products across state lines or from other venders.
 
Florida’s nearby states have an average cigarette tax of just 33-cents per pack. If this proposed tax hike passes, Floridians will have to pay 84-cents per pack, nearly triple that of their neighbors. In a similar situation, Maryland raised the tobacco tax last year to cover a budget projection shortfall. However, the problem was only exacerbated when sales fell 25% after consumers drove to nearby states with lower tax rates.
 
Florida’s budgetary problems have been caused by a slowing economy combined with unsustainably high government spending.  During the recent economic boom, states found it easy to spend taxpayer dollars. In fact, Florida has increased spending by approximately $10 billion since 2002.  However, that revenue is now gone and Florida has overspent by $2.14 billion this fiscal year. Out-of-control spending caused this problem and tax increases are not the solution.
 
It is critical to revitalize the Florida economy with tax cuts, not tax increases.  We must lift the burden of larger government from the backs of hardworking taxpayers and consumers instead of furthering depressing economic activity. As you continue to weigh options to rectify the state’s overspending problem, I urge you to stand up for taxpayers and oppose all tax increases. If you have any questions, please contact Kelly Cobb or Nathan Pick, state affairs managers, at (202) 785-0266.
 
Onward,
Grover Norquist
 

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2008 Post-Election State Legislature Summary


Posted by Kelly William Cobb on Wednesday, November 12th, 2008, 12:00 PM PERMALINK


While focus of the 2008 elections was predominantly on the federal level, state elections showed that the so-called Democrat Tsunami largely occurred in 2006.  In 2008, Republicans in the states came out fairly unscathed and in some places made important gains.

In the 2008 election, Republicans had a net loss of only 78 state legislators out of 7,382; compare to over 300 legislator losses in 2006. While Democrats picked up 5 state chambers this year, Republicans picked up 4. Democrats did take the New York Senate for the first time since 1964; but Republicans took control of the Tennessee House and Senate for the first time since the civil war and the Oklahoma Senate for the first time ever.

Republicans are also making inroads in areas that Democrats traditionally always take on the local level. Since reconstruction, Democrats have controlled the state legislatures of Arkansas, Louisiana, Mississippi, and Alabama. Until the 1980s, Democrats controlled over 80% of state legislative seats in southern states. Today, they control just 53% and that number continues to drop.

On the gubernatorial side, Democrats netted 6 offices in 2006, switching places with Republicans to control 28 of the 50 state governors' mansions. This year, however, Republicans had a net loss of only one of the 11 gubernatorial races - after one-term Governor Matt Blunt left an open seat in Missouri. But looking forward to 2010, there are 36 governors' offices that are up and 20 of them are held by Democrats.

A final note: since 1992, Republicans have a net gain of 7 state senate chambers, 2 state house chambers, 216 state legislators, and 1 governor's office.

For ATR's complete breakdown of post-election state legislatures, click here.

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Mainers Vote Overwhelmingly to Repeal Dirigo Health Tax


Posted by Kelly William Cobb on Thursday, November 6th, 2008, 12:00 PM PERMALINK


Below is ATR's press release celebrating the repeal of a multi-million dollar tax hike on soda, alcohol, and insurance in Maine.

On November 4, Mainers voted by a near 65-35 margin to pass Question 1, repealing a $77 million tax on soft drinks, beer, wine, and health insurance claims. The tax, passed by the state legislature earlier this year, was slated to raise money for Dirigo Health, the state’s government-run health insurance program.
 
If Question 1 had failed, the tax hike would have added 24-cents to a six-pack of soda, 7-cents to a bottle of wine, and 16-cents to a six-pack of beer in Maine. The taxes would have also placed a 1.8% fee on all insurance claims. The Center for Fiscal Accountability and Americans for Tax Reform have calculated that after accounting for various excise taxes, corporate income taxes, and other federal, state and local taxes, consumers across the country already spend 37.6% of the cost of soda and 56.2% of the cost of beer paying for government taxes and fees.
 
“The overwhelming turnout of Maine voters to pass Question 1 and repeal the Dirigo tax is a huge victory for consumers and a crushing defeat for Governor Baldacci and the Democrat state legislature that tried to pile $77 million in new taxes onto Maine residents,” said Grover Norquist, president of Americans for Tax Reform.
 
When launched in 2005, the Dirigo Health insurance program was projected to cover nearly 128,000 Maine residents by 2009; however, the program is currently covering less than 12,000 individuals. To increase funding, the Democrat-controlled state legislature passed the Dirigo tax hike last spring with little public knowledge or discussion. Following a citizen petition by the Fed Up With Taxes coalition, the tax was put on hold pending the results of the November 4 vote.

“The passage of Question 1 is not just a clear message that taxes on Maine consumers are too high, but also a referendum on the state’s Dirigo health program,” added Norquist. “Mainers realize that the state’s attempt at big-government health insurance has failed miserably and they are simply not willing to foot the bill for it. Governor Baldacci and state lawmakers should take note that higher taxes for the purpose of state-run health insurance simply does not fly in the Pine Tree State.”

 Click here for a PDF version of the press release.

 

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