The New Jersey state Senate Health, Human Services, and Senior Citizens Committee recently passed a bill imposing a massive 75 percent tax on e-cigarettes sold in the state. The bill mirrors a proposal put forth by Governor Christie earlier this year, which we wrote about here. ATR opposes Senate Bill 1867 and all efforts to raise taxes in New Jersey.
At the end of April, state officials announced that the New Jersey budget shortfall grew to $807 million. Though that staggering number can be directly attributed to the higher taxes that took effect with last year’s fiscal cliff deal, New Jersey’s primary driver of long term budgetary issues is its addiction to overspending. This can only be addressed with reforms that deal with the costs of public employee pensions, health benefits, and debt service costs which comprise more than 94 percent of year-over-year budget growth. The state’s pension system alone is $54 billion underfunded – an issue Governor Christie has called for additional reforms to address.
Raising taxes is a harmful distraction from these issues. Tax hikes on innovative products, like e-cigarettes, that save lives is a step in the wrong direction. This bill will chase business and revenue out of the state and onto the Internet, which is already a significant market for e-cigarette and vapor products. Small businesses, like convenience stores, stand to lose tens of thousands of dollars, which is particularly troubling in a time of tepid economic growth.
We urge the Senate Budget Committee to reject this bill and begin to face the facts on the pension, health benefits, and debt service cost crisis. Tax hikes won’t make these issues go away.
Our letter to the Senate Finance Committee can be read here.