Americans for Tax Reform (ATR) sent a letter to Alabama legislators yesterday in opposition to Governor Bentley’s proposed tax hikes. The Governor has proposed increases in cigarette and e-cigarette taxes as well as reductions in state income tax deductions to address the $200 million shortfall in the General Fund. Next week, the legislature will reconvene with a Special Session to debate whether tax increases, spending reductions, or budgetary reforms are the best way to balance the budget.
ATR’s letter explains that tobacco taxes – like the one proposed by Governor Bentley – punish the poor and are an unreliable source of revenue. Of the 33 tobacco tax increases between 2009 and 2013, only three have them have met revenue projections. All others fell short, showing that balancing the budget on unpredictable revenue streams is irresponsible.
The letter also strongly opposes the proposed dramatic increase in e-cigarette taxes:
“With e-cigarettes, the free market has provided a solution to a problem that social engineers have not been able to address through stiff government regulations. The imposition of tax hikes on innovative products that reduce smoking and people’s dependence on tobacco cigarettes is misguided and will impede proven harm reduction methods. It will also kill jobs and discourage poor Alabamans from making the switch from cigarettes to tobacco-free alternatives.”
As an alternative to these destructive taxes, ATR encourages legislatures focus on reforming the budgetary process. Currently, Alabama is one of only three states with a separate Education and General Fund budget. Combining these budgets would allow for more flexibility when appropriating funds.
The letter concludes by pointing out that Alabama’s budget problems are not the result of undertaxation, but instead the result of overspending:
“Between 1999 and 2009, Alabama overspent beyond the rate of inflation and population growth by 21 percent. Tax hikes should be ruled out because Alabama doesn’t have a revenue problem; it has an earmarking and spending problem. As such, I would urge you to reject the Governor’s attempts to raise taxes, especially on those who can least afford it.”
Click here to see the full letter.