Today the Oklahoma Legislature will begin debating a bill that will free up localities to impose higher tobacco taxes. As we have seen in other states, giving an "assist" of this nature to tax hikers is a violation of the Taxpayer Protection Pledge.
A tax increase in any form should be a non-starter in this economic climate, but tobacco taxes are especially harmful. They rarely raise the amount of revenue promised, creating future budget holes. They have a regressive impact on low-income residents. And they chase commerce across state lines, further harming job creators who are already struggling to make payroll.
It should be known that Gov. Mary Fallin essentially declared bills of this nature dead on arrival when she signed the Taxpayer Protection Pledge. It would thus be useful for the legislature to table this legislation and continue their hard work to get government out of the way of private sector-led job creation and economic growth.
To see Grover's letter to the legislature, see below.
February 15, 2011
Today I write in opposition to HB 2135, which would expand local taxing authority. Because it facilitates tax increases on the local level, HB 2135 is in violation of the Taxpayer Protection Pledge.
Tough economic times endure in Oklahoma and elsewhere. To vote for HB 2135 is to give an “assist” to those who seek to impose higher taxes on Oklahomans. Government at all levels must continue to live within its means as families dig themselves out of this damaging economic downturn. Fiscal responsibility is the key – not enabling revenue increases at the expense of taxpayers.
This particular bill involves tobacco taxation. It should be known that higher taxes on tobacco and other products sold at convenience stores around the state are implicit tax increases on small business and the poor. Because low-income individuals are more likely to smoke, and targeted excise taxes consume more of their disposable income, this piece of legislation enables the imposition of highly regressive tax hikes at the local level.
Perhaps more important is the impact on job creation via Oklahoma’s small business community. When government drives up the price of a good, consumers purchase less of it within the affected jurisdiction. With specific respect to tobacco, they either smoke less or purchase the product elsewhere in an effort to avoid higher taxes. This hampers Oklahoma’s small businesses’ ability to create jobs or even make existing payroll.
I would also note that as a Taxpayer Protection Pledge signer, Gov. Mary Fallin has already signaled this bill dead on arrival, as it is not in keeping with her written promise to oppose any and all tax increases.
I urge you to vote down this bill and assume the task of right-sizing state government, rather than considering legislation that would increase your constituents’ annual tax bill.
If you have any questions regarding ATR’s opposition to HB 2135, please contact state affairs manager Joshua Culling at [email protected].
CC: The Honorable Mary Fallin