Wyoming’s Cigarette Tax Would Exacerbate Inflation

Wyoming lawmakers on the House Revenue Committee are soon expected to hold a hearing on HB 58, a bill to increase the state cigarette tax by more than 70%. The tax hike would place unnecessary hardship on low-income families facing unprecedented inflation while doing nothing to reduce smoking or increase tax revenues.

ATR’s Director of Consumer Issues, Tim Andrews, authored written testimony that was distributed to lawmakers this morning ahead of the anticipated hearing. The letter called on lawmakers to reject HB 58 and instead pursue policies that encourage adults who smoke to quit through access to harm reduction products like e-cigarettes. An excerpt from the testimony can be read below.

“Data from the National Adult Tobacco Surveys has consistently demonstrated that tobacco tax increases have no statistically significant impact on the prevalence of smoking among those with household incomes of less than $25,000. 72% of those who smoke are from low-income communities, and to increase taxes on people unable to quit as they are struggling with the costs of unprecedented inflation and the continued Covid-19 pandemic will put unnecessary hardship on families who are already struggling to provide for themselves and others.

Further, cigarette tax hikes promote black markets for smuggled tobacco products, and consistently result in revenues coming in far lower than projected. Contrary to popular belief that tobacco smuggling a victimless crime consisting of someone purchasing a few extra cartons across state lines, most tobacco smuggling is run by multi-million-dollar organized crime syndicates. These networks, who also engage in human trafficking & money laundering, have also been used to fund terrorist and the US State Department has explicitly called tobacco smuggling a “threat to national security.”

Only three out of 32 state tobacco increases between 2009 and 2013 met tax revenue estimates and for this reason, economists and tax policy experts view tobacco taxes as unsound policy, and it is highly unlikely that revenue estimates will be met. It has been determined that recent increases in the cigarette tax rate in the US have not led to anything like the reductions that cigarette tax advocates promised. During years when there is a large increase in taxes, there is not an equivalent drop in cigarette purchases.”

Andrews’ full testimony can be found here.