Louisiana House Ways & Means Committee takes up tax hikes


Posted by Patrick M. Gleason on Monday, May 16th, 2011, 9:59 AM PERMALINK

The cresting of the Mississippi River and catastrophic consequences it portends for communities in the Atchafalaya Basin is not distracting or deterring some Louisiana lawmakers who are hell bent on raising taxes this legislative session.

This morning the House Ways & Means Committee will take up two bills, HB 63 & HB 591, that seek to make the state more reliant on the declining and unstable source of revenue that is the state tobacco excise tax.

HB 63 would raise the state tobacco tax from $0.36 to $1.06 – a 194% increase. HB 591 would prevent the scheduled expiration of a “temporary” $0.04 cent cigarette tax passed in 2000.

The effort to block the sunset of this $0.04 tax classifies as a tax increase and a violation of the Taxpayer Protection Pledge, which nearly one-third of the Ways & Means Committee has signed.

HB 591 is also just the latest example demonstrating that there is no such thing as a “temporary” tax increase in the eyes of profligate legislators. California is also providing proof of that unfortunate truth this year, where Gov. Jerry Brown and legislative Democrats are attempting to extend the largest state tax increase in U.S. history. In Arizona, Gov. Jan Brewer is already laying the groundwork for an extension of the three year sales tax increase that she signed into law last year. Perhaps the most famous example of the fallacy of “temporary” tax hikes is Pennsylvania’s Johnstown flood tax. An 18 percent tax on alcohol put in place to pay for the clean up of that famous 1936 flood, that levy is still on the books in the Keystone State today.

By making the state more reliant on tobacco taxes, HB 63 & HB 591 represent the height of fiscal irresponsibility. Tobacco tax increases amount to a job-killing budget gimmick. Of the 57 tobacco tax increases enacted by states between 2003 and 2008, only 16 met initial revenue projections. Cigarette tax hikes are nothing more than a place holder for future tax increases on the general populace. Washington, DC experienced this first hand after the city council passed a tobacco tax increase in 2009 as an ill-advised approach to balancing the budget. That increase ended up depriving the city of millions of dollars as tobacco tax revenue plunged below pre-increase levels. Now DC Mayor Vincent Gray is pushing an income tax increase to make up the difference.

ATR encourages Louisiana taxpayers to contact their representatives in Baton Rouge today and urge them to put expenditures in line with revenues, like families across the Pelican State are doing, and to stand with Gov. Bobby Jindal in opposition to job-killing tax hikes. Louisiana residents can contact their state rep by simply clicking here.

UPDATE: Good news - HB 63, the 194% tobacco tax hike, died in committee. ATR will continue working to defeat HB 591, which would retain the "temporary" 4 cent per pack cigarette tax.

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