Georgia Lawmakers Pass Massive New Tax Hikes Targeting Tourism and Commuters
Last night, Georgia lawmakers passed House Bill 170, a massive transportation funding bill that will raise taxes by $700 million a year. Americans for Tax Reform opposed the legislation and urged the legislature to prioritize currently collected revenue to fund new and existing transportation projects instead.
Georgia ranks 36th in the country in the Tax Foundation's State Business Tax Climate. Florida ranks 5th. As Florida looks to further reduce the net tax burden on residents, particularly low-income ones, Georgia continues to fall behind by not working to simplify the tax code with pro-growth policies that reduce the net burden on small businesses and consumers. This may prove to be a boon for Governor Rick Scott, who has worked hard to attract new residents and businesses to the Sunshine State.
Here is a list of the tax hikes including in HB 170:
- A new $200 fee on electric vehicles and the elimination of a $5,000 tax credit for purchases or leases of electric cars;
- A new fee on heavy trucks between $50-$100 amounting to a $50 million tax hike;
- A new $5 per night hotel or motel occupancy tax amounting to a $200 million tax hike;
- A recalculation of the statewide gas tax and fee structure amounting to $390 million in tax hikes.
According to the Georgia Public Policy Foundation, "Local sales taxes on motor fuel amount to about 6 cents per gallon at current prices, so a revenue-neutral excise tax that does not change local sales taxes on motor fuel would equal 23.2 cents per gallon." Unfortunately, this legislation was not revenue-neutral. HB 170 imposes a new state 26 and 29 cent excise tax per gallon of gas and diesel. This is on top of the local taxes and a federal 18.4 cent per gallon gas and 24.4 diesel tax.
A last minute addition to the legislation included the $5 per night motel and hotel tax. These taxes are a top target for lawmakers who like raising taxes without doing so on people who can vote them out of office. These taxes punish hoteliers, small businesses that provide jobs and help stoke economic growth in their communities. Higher taxes reduce hotel business, which hurts downstream businesses such as restaurants and convenience stores whose success depends on hotel traffic. In inserting this tax hike into HB 170 at the last minute, legislators targeted the 5th largest employer in the state, an industry that already generates $2.8 billion in direct and indirect revenue for Georgia.
ATR opposes House Bill 170 and if Governor Nathan Deal signs it, he will be violating his Taxpayer Protection Pledge to Georgia taxpayers.
More from Americans for Tax Reform
Cigarettes: A Case Study in the Slow Rise of Excise Taxes
The 18th century English writer Dr. Samuel Johnson defined excise taxes as "A hateful tax levied upon commodities, and adjudged not by the common judges of property, but wretches hired by those to whom excise is paid." In the midst of ongoing debates about tax hikes on tobacco cigarettes, liquor, soda, and vapor products, this seems relevant.
Over the last two years, a new target for the public health wretches has emerged, replacing the long-standing number one target of sin taxes aimed at extracting money from low-income consumers. Electronic cigarettes and vapor products are disruptive, innovative, technology products that are accomplishing what the public health community never could - they're getting people to quit smoking. Some estimates and national surveys suggest that more than six million people in the United States are daily vapers. This comes at a time when cigarette smoking rates are among the lowest they've been in years.
In 2014, 15 states considered proposals to tax vapor products like tobacco products with taxes as high as 95 percent. Alternative proposals, like those on the books in North Carolina, subject vapor products to a smaller tax of $.05 per mL of liquid nicotine. A proposal in Arkansas this year would do the same thing.
A recent history of cigarette tax increases should provide some insight into the future of e-cigarette and vapor product taxes, should more states add excise taxes to the books with regards to the products. As we at ATR have noted before, e-cigarettes should not be taxed like tobacco products. Currently, only Minnesota and North Carolina impose sin taxes on the products - with Minnesota taxing them at 95 percent, up 75 percent from two years ago.
But what about smaller taxes, less than 75, 95, or 50 percent? A look at cigarette tax hikes since 2000 may shed light on the threat of accepting such proposals.
The average excise tax on a pack of cigarettes in 1999 was 38.9 cents. Today, the current average excise tax is $1.54 per pack. States have increased tobacco taxes about five times as often as they have raised alcohol taxes between 2000 and 2015, with 111 increases over that time according to the National Association of State Budget Officers.
As you can see, the years during and immediately following a recession saw the largest number of cigarette tax increases. In 2003, 19 states increased tobacco taxes; 15 in 2004 and 16 in 2010.
What does any of this have to do with e-cigarettes and vapor products? Many state legislators have begun to realize that their increasing reliance on tobacco revenue to fund a wide range of programs may have been a bad bet. With declining cigarette revenue, states stand to lose (and are) billions of dollars in tax dollars. One would hope this could be celebrated, as less and less people are smoking but many legislators are clearly more concerned with compensating for this declining and lost revenue. And not in public health.
E-cigarettes are the new target. Click here to view a map of the tax threats in the states.
The rise in cigarette excise taxes over the past 15 years should provide a warning to those who think once a tax is on the books in a state, there won't be efforts to raise it slowly over time. Minnesota's tax on e-cigarettes began at 75 percent and is now 95 percent. Some taxes are far more damaging than others. But the fact remains, it is much easier to fend off new taxes than to fight higher taxes. Just ask smokers.
More from Americans for Tax Reform
Governor Rick Scott Kicks Off “Cut My Taxes Week” at Florida State Capital
Today, Gov. Rick Scott (R-Fla.) kicked off “Cut My Taxes Week” at the Florida State Capitol. Taxpayers are being invited to bring their bills and use a tax cut calculator to see their savings under the governor’s proposed cell phone and TV tax cut.
Whether or not you’re a resident of Florida, you can use the calculator to see what kind of savings you’d experience under Gov. Scott’s proposal by clicking here.
The Florida Communication Services Tax (CST) is imposed on cell phones, cable and satellite TV, and non-residential landline phone services. While the state rate is 9.17 percent, with local taxes the average rate exceeds 14 percent and is as high as 17 percent in some areas.
Governor Scott’s proposed tax cut reduces the state portion by 3.6 percent to 5.57 percent, which equates to a potential $470 million in annual savings for taxpayers. Estimates suggest the cut will save every single Florida family around $43-$54 a year, depending on their provider and service.
Currently, Florida has the fourth highest CST rate in the country, behind Washington, Nebraska, and New York. These state, local, and federal taxes can add up to more than 22 percent of service costs, which represent a significant burden on families, especially low-income ones. Prepaid calling services are not subjected to these high discretionary tax rates, making switching more attractive.
The CST tax is not neutral as it forces consumers to alter their behaviors. Reducing it will provide financial relief to families and small businesses and may create jobs by attract more investments in telecommunications infrastructure.
Gov. Scott is so committed to this most recent set of tax cuts that he will be manning the booth at the state capitol himself today and tomorrow. Florida residents are encouraged to take advantage of the opportunity to calculate their savings with the governor in person.
The Senate Communications, Energy, and Public Utilities Committee unanimously passed a version of Scott’s tax cut. Americans for Tax Reform encourages the entire legislature to pass the CST cell phone and TV tax relief legislation.
Flashback: Governor Rick Scott has already signed over $2 billion in tax cuts into law. He also campaigned for re-election on reducing the communications tax and is a signer of the Taxpayer Protection Pledge.
More from Americans for Tax Reform
Documents: California Department of Public Health Launches $75 Million Campaign to Discourage Vaping
Today, the California Department of Public Health (CADPH) kicked off a new public relations campaign aimed at discouraging consumers from using electronic cigarettes and vapor products. Documents reveal that a cost of $75 million to taxpayers, this campaign is the most recent in a long list of efforts to create negative public sentiment about vaping.
In a press release, the CADPH stated that today they were going to “premiere a series of television, digital, and outdoor ads in a new campaign called ‘Wake Up,’ as part of its educational effort to inform the public about the dangers of e-cigarettes.”
Though they do not announce the cost of the program in the press release, documents from the California Tobacco Control Program Funding Opportunities and Resources reveal the cost of this campaign: “Approximately $75 million is estimated to be available for the five-year contract period.”
A website, www.stillblowingsmoke.org is being promoted by the state. To the tune of the 1958 song by The Chordettes, one ad flashes images of young adults vaping. Another ad claims that e-cigarettes are “a new way to inhale toxic chemicals with a drug addictive as heroin.”
"The orchestrators of this campaign at the California Department of Public Health should be ashamed of themselves. For years, public health bureaucrats claimed that efforts to discourage smoking were about increasing public health. This most recent $75 million taxpayer-funded effort has further exposed the fraud of those claims by demonstrating that anti-vaping government activists care about one thing and one thing alone: money," said ATR president Grover Norquist. "Campaigns like this are clearly aimed at preventing smokers from making the transition to a much healthier alternative so that the state can continue to fund big government initiatives with cigarette tax revenue."
The original documents from the state show that a Request for a Proposal (RFP) was released in December of 2013 as RFP 14-10003. A “pre-proposal webinar” stated that at the time, the goal was to make California “America’s largest non-smoking section.” Despite the fact that vapor products don’t contain tobacco and smoke isn’t produced in their use, this proposal asked a firm to apply for available taxpayer resources for this project.
A PowerPoint at the time noted “Other Tobacco Products” like electronic cigarettes were an area of concern. One slide suggested, “Funding: Less smoking = less tax collected” with regards to smoking.
In targeting an effective smoking cessation device – vapor products – it is clear that the California Department of Public Health wants to maintain cigarette sales as an important funding source for their big spending priorities. By discouraging vaping, the state may recoup potential revenue losses that occur when a smoker transitions from unhealthy cigarette use to products proven to be 99% less harmful, but not taxed as much. In doing so, the CADPH is putting at risk thousands of lives as they promote lies about the innovative and disruptive technology products that have grown in popularity over the last 5 years.
E-cigarettes are accomplishing what social engineers never could: they’re getting people to quit smoking across all demographics. And they’re accomplishing this without taxpayer funded PR campaigns or government bans and regulations.
A joint effort by the American Vaping Association, The Consumer Advocates for Smoke-free Alternatives Association, and the Smoke Free Alternatives Trade Association mocks CADPH’s propaganda and creates a different narrative about the product with a website of their own: www.notblowingsmoke.org. The website uses similar graphics and images, flipping the script on the CADPH.
Here is one example from a CADPH ad:
More from Americans for Tax Reform
Governor Paul LePage’s Plan for Prosperity in Maine
Governor Paul LePage (R-Maine) recently announced his plan to place on the ballot a referendum in 2016 to abolish the income tax. His proposed amendment to the Maine Constitution would eliminate the income tax for good, preventing Augusta politicians from re-implementing the income tax in the future via legislative vote.
LePage announced that he would likely set 2020 as the year the income tax repeal would go into effect. If the referendum were successful, Maine would become the tenth state to not tax income, which would help fulfill one of the promises LePage made regarding his two terms in office.
Gov. Le Page recently pitched his budget and the elimination of the income tax at a town hall forum:
“The whole purpose of my budget is to make Maine more prosperous and to give the Maine worker the largest wage increase since the 1960s,” LePage said. “This is better than any minimum wage you can talk about. This will propel the economy for decades.”
According to his new budget, he not only wants to abolish the entire state income tax - which is comprised of two brackets - but also reduce the top tax rate from 7.95 % to 5.75%. His budget also reduces top corporate tax rate from 8.93% to 6.75% while broadening and raising the state sales tax from 5.5% to 6.5%.
The Tax Foundation concluded in their State Business Climate Index, that if all of Le Page’s budget proposals were implemented, Maine would move from being ranked at 33rd to 23rd in the index.
The budget would result in more than $250 million in net tax cuts, independent of the plan to eliminate the income tax.
In 2014, Forbes ranked Maine as second worst state to do business in, something that clearly concerns Gov. LePage. The governor has worked to make the case since his first election 5 years ago that the tax code must be simpler, flatter, and encourage more economic growth. His most recent budget and his plan to place the elimination of the income tax on the ballot further demonstrates his commitment to those principles.
More from Americans for Tax Reform
ATR Supports Mid-Level Dental Reform in Texas
While the states have grappled with implementing a wide range of federal health care mandates, questions about rising costs the next steps in health care reform have lingered in Washington. Fortunately, states don't have to wait to act.
In what has been called a "big idea" for social change, a new category of mid-level dental practitioners known as "dental therapists" may hold the key for providing dental services in underserved and rural populations. Like hygienists, dental therapists work under the supervision of dentists with collaborative agreements that allow them to provide an expanded list of services to patients. Governor Paul LePage and former Governor Tim Pawlenty, both Republicans, already signed legislation permitting the creation of these mid-level practitioners in Maine and Minnesota.
Americans for Tax Reform supports this bold type of dental care reform because it, at no cost to taxpayers, stands to expand health care to underserved populations in the United States.
Two bills in Texas would tear down an unnecessary barrier created by protectionist government rules by permitting small business to hire trained "Dental Hygiene Practitioners" to aid in their dental practices. ATR president Grover Norquist recently sent a letter to members of the Texas House, Senate, and Lt. Gov. Dan Patrick in support of Senate Bill 787 and House Bill 1940.
As Grover Norquist notes,
"Dentists who want to expand their practices to include educated and qualified mid-level practitioners should be free to do so. Innovative ideas like this have faced intense opposition but are very similar to the fights that took place decades ago with the emergence of nurse practitioners. Physicians began working and collaborating with nurses who had clinical experience to fill a void left by specialization in the medical field. Today, nurse practitioners provide equivalent or superior care to that provided by physicians. SB 787 and HB 1940 responsibly follow the nurse practitioner model for dental practices."
This is a free market health care solution that utilizes the desire and qualifications of trained professionals to provide much needed dental care to underserved populations without raising costs on taxpayers. It would be irresponsible for the state to stand in the way.
More from Americans for Tax Reform
ATR Opposes Onerous Restrictions on Vapor Market in Indiana
When the debate over electronic cigarettes and vapor products started months ago in Indiana, the Attorney General presented a misguided idea aimed at raising the cost of these innovative products. He suggested e-cigarettes be subjected to the same rate of taxation as smokeless tobacco and other tobacco products. They are currently subjected to the sales tax. As we noted at the time, this would have created an incentive for people to continue smoking traditional tobacco cigarettes instead of making the switch to a much healthier alternative.
The tax debate seems to have stalled but a more nefarious proposal has taken its place. Senate Bill 539 and its companion House Bill 1432 have both passed their respective chambers of the Indiana legislature. Americans for Tax Reform opposes these bills and recently sent a letter to Indiana lawmakers and Governor Mike Pence explaining why.
These pieces of legislation create a state-based regulatory framework for vapor product packaging and labeling, a framework that is best left to the Food and Drug Administration (FDA). If every state imposed its own set of guidelines for good manufacturing practices, labeling, and packaging, companies who sold products in multiple states would have a compliance nightmare on their hands, likely reducing the availability of products on the market.
Additionally, the FDA is better suited than the state to regulate and test ingredients and batches of products in this industry.
There is a more sinister motive behind the push to regulate these products that has nothing to do with protecting consumer or the general public. These regulations are being pushed by a company intent on establishing a monopoly on vapor product sales in Indiana.
The Indiana Vapor Company LLC would be set up to be the sole manufacturer of e-liquid (the product consumers use to refill their "open system" vapor products) in Indiana. Small businesses in the state could not afford the expensive security systems SB 539 and HB 1432 mandates, security systems far more complex than ones required by the federal government for tobacco companies. Indiana Vapor Company has suspicious ties to a Centaur Gaming, a company that is no stranger to the benefits of a monopoly on the market.
We urge the legislature to reject this blatant act of crony capitalism and defer to the FDA for the appropriate set of guidelines for vapor products. Any set of state-based regulations should acknowledge that when the FDA releases their minimum level of product guidelines, they will trump state laws to ensure simplicity and conformity for all companies who do business in multiple states. This will benefit consumers, who seek a wide range of available flavors and options in the vapor market in their journey to quit smoking.
More from Americans for Tax Reform
Another Massachusetts Town Goes Rogue on “Tobacco” Products
Four months ago, the town of Westminster, Massachusetts considered an outright ban on all tobacco products. The Board of Health’s proposal was so absurd that the Boston Globe said, “There are radical proposals, and then there’s Westminster’s plan to ban tobacco sales within town limits.”
The Board also lumped non-tobacco products like electronic cigarettes into the proposal, putting on display their utter lack of common sense or concern for public health. Here is a copy of the letter that we sent to the Board at the time.
The public was outraged; tobacco and e-cigarettes are legal products after all. The Board of Health was met with the full fury of local citizens who wanted the nanny-staters to step off. They dropped the proposal. Common sense prevailed.
Now, less than an hour’s drive away in the town of Winchester, Massachusetts another Board of Health has gone rogue. After increasing the minimum age to purchase tobacco from 18 to 21 exactly one year ago, they’re looking to further control local citizens lives with restrictions on tobacco product sales and electronic cigarette use.
In their meeting tonight, the Board of Health will discuss proposals that include banning the sale of flavored tobacco and e-cigarettes, implementing a minimum cost on cigars of $2.15 and $5 for a two-pack, and banning smoking and vaping in public places and workplaces.
Welcome to the theater of the absurd.
If the Winchester Board of Public Health’s goal is to ensure that smokers continue smoking traditional tobacco cigarettes, all of these proposals make perfect sense. If, however, their goal is the overall improvement of public health, restricting the availability of options for e-cigarettes does not help accomplish this goal.
Adults prefer flavors to traditional tobacco and menthol. A recent survey indicates that more than 65 percent of non-smoking vapers (consumers of non-tobacco e-cigarettes and vapor products) consider flavors other than tobacco to have been important or very important in helping them quit. For women, that number is more than 70 percent.
Prohibiting flavors ensures that smokers have fewer options when it comes to quitting an unhealthy habit. Electronic cigarettes and vapor products are estimated to be 99% less hazardous than smoking.
Restricting the availability of options to adult consumers under the guise of “protecting children” puts at risk a publicly stated goal of the public health community for decades: getting people to quit smoking cigarettes.
We urge the Winchester, Massachusetts Board of Health to reject these proposals and to focus on education initiatives supported by facts instead.
More from Americans for Tax Reform
ATR Joins ACLU and Institute for Justice in Support of Civil Asset Forfeiture Reform in Virginia
Today, Americans for Tax Reform joined the American Civil Liberties Union (ACLU) of Virginia and the The Institute for Justice in support of Virginia House Bill 1287, which would require a criminal conviction before law enforcement may seize and keep an individual’s private property. The legislation, sponsored by Delegate Mark Cole (R-Va.) passed the full House of Delegates by a vote of 92-6 two weeks ago and is up for a vote in the Senate Finance Committee today.
In a recent hearing of the U.S. House subcommittee on crime, terrorism, homeland security, and investigations, chairman Rep. F. James Sensenbrenner Jr. (R-Wis.) noted, “The government is seizing billions of dollars of cash and property from Americans, often without charging them with a crime.”
There is a bipartisan consensus on this problem. Rep. Sheila Jackson Lee (D-Texas) said, “The size of these amounts helps put into focus the tension between our property and due process rights on the one hand, and the government’s interest in maintaining this funding stream on the other, often relying on civil forfeiture procedures involving the low standard of proof…Unfortunately, it is increasingly apparent that our laws are not sufficient in this regard.”
The Virginia Beach Police Department seized $6 million in assets between 2008 and 2013. The city Commonwealth’s Attorney said, “it allows us to be able to afford equipment and training for officers and prosecutors.”
As we note in the letter to the legislature, “policing should be based on public safety, not supplementing local law enforcement department budgets.”
Virginia’s civil asset forfeiture laws are among the worst in the nation. The Institute for Justice gave Virginia a D- because of the low burden of proof in forfeiture cases. The state’s laws are ripe for abuse, with countless examples in Virginia of lives being ruined as a result of seize first and make the defendant prove their innocence next protocols.
As the Richmond Times-Dispatch’s A. Barton Hinkle points out, Mark Cole’s legislation “would have saved a lot of misery for people such as Mandrel Stuart, who couldn’t afford to keep his Staunton barbecue business going after police seized more than $17,000 from him in a minor traffic stop. Unlike many in such straits, Stuart did not agree to settle for half his money back and a promise not to sue. He won in court, but still lost his business."
The burden of proof should not be on private property owners to prove to law enforcement officials that their assets were obtained legally; it should be the other way around.
ATR joins the ACLU and Institute for Justice in urging the Virginia state Senate to pass House Bill 1287.
More from Americans for Tax Reform
ATR Opposes House Bill 170's Massive Gas Tax Increase in Georgia
In the aftermath of a joint legislative study committee report on transportation, Georgia lawmakers have spent the last month figuring out how to extract more money from taxpayers to pay for transportation projects. The report called for at least $1-1.5 billion in additional spending annually. To address “the full universe of transportation needs, including establishment of passenger rail systems,” the report claimed the state would need between $3.9 and $5.4 billion annually, constituting a 20 percent increase in the total state budget.
Georgia House Bill 170, which is supported by Republican Gov. Nathan Deal and House Speaker David Ralston, would raise at least $1 billion per year by making a number of changes to the state gas tax. Gasoline in Georgia is subjected to an excise tax of 7.5 cents per gallon, a 4% sales tax and in most places another local sales tax of 3%-4%. Under H.B. 170, this mix of taxes would be converted to a 29.2 cents per gallon tax, indexed to inflation. This is a tax increase that rises year by year.
As Tom Crawford with the Gainesville Times noted, “the current mix of excise and sales taxes on gasoline totals roughly 27 cents per gallon.” By indexing the gas tax to inflation and increasing the tax by more than 2 cents per gallon, H.B. 170 is clearly a tax increase.
Drivers of hybrids aren’t forgotten. The bill imposes a car tax hike on alternative fuel vehicles of between $200-$300 per year, indexed to inflation. Virginia’s 2013 transportation tax hike did this as well until Democrat Governor Terry McAuliffe repealed the tax less than 6 months later.
H.B. 170 also engages in an inventive gimmick to generate $500 million in new revenue. By immediately absorbing local gasoline sales tax revenue, the state will now collect and spend money otherwise collected and spent by localities. Most localities spend this money on a bevy of non-transportation needs, like education. Absent the willpower to cut spending though, it is likely local governments will consider tax hikes in the future.
Upon the expiration of local sales taxes on gasoline, H.B. 170 permits localities to raise the local excise tax on gasoline by up to 3 cents per gallon before requiring that further gas tax hikes be approved by referendum for a maximum of 6 cents per gallon in local taxes. This sets in motion future tax hikes, not all of which even need voter approval.
While we take no position on the state absorbing local tax revenue streams, directing gas tax revenue to transportation projects instead of unrelated spending programs like education, should be applauded. In 2014, by a 80-20 margin Wisconsin voters passed a ballot initiative requiring gas tax revenue be spent on transportation. Consumers' expectations on gas tax revenue are clear: spend it on transportation and nothing else. Unfortunately, the definition of "transportation" is broad and encompasses a number of expensive projects, all of which may not actually alleviate traffic to improve anyone's commute to work.
So what would the total gas tax bite be if H.B. 170 passed in Georgia?
Total Tax Possible
7.2 cents/gallon + 4% sales tax
Chained to CPI
3%-4% sales tax
Up to 3 cents/gallon
Up to 6 cents/gallon
ATR urges the legislature to revisit its transportation spending priorities and reject all gas tax hikes on consumers.