Baton Rouge, Louisiana – Louisiana lawmakers are looking to offset a serious state budget deficit by increasing tobacco taxes again, this time by up to 50 percent or more across the board. Somebody should tell them it doesn’t work that way, says the International Premium Cigar & Pipe Retailers Association.
The House Ways and Means Committee of the Louisiana State Legislature is considering H.B. 63, legislation that would nearly triple the excise tax on cigarettes. The excise tax on small and large cigars as well as smokeless and pipe tobacco would be raised by up to 50 percent.
"Higher taxes on tobacco products will only drive whatever business is left into the hands of Internet, out-of-state, mail order merchants and criminals who do not pay taxes to Louisiana and do not employ Louisiana’s citizens. They do not have the same stake in our communities that we do with our family-owned businesses and neighborhood employees," said McCalla.
McCalla said that customers would obtain their cigarettes and other tobacco products in, say, Mississippi which has significantly lower tobacco taxes.
"By driving smokers to purchase their cigarettes across state lines or through untaxed or lower-tax venues such as Native American territories and the Internet, H.B. 63 will hurt local businesses and absolutely fail to raise the anticipated revenues," he said.
The IPCPR maintains that raising excise taxes does not produce projected revenue.
"Of the 57 excise tax increases that states implemented between 2003 and 2007, only 16 met or exceeded revenue targets. New Jersey, for example, increased its cigarette tax in 2006 and instead of gaining a projected $30 million in revenue, the state lost more than $22 million," McCalla said.
The regressive nature of excise taxes was also cited by McCalla.
"Excise taxes disproportionately impact the poor and those living on fixed incomes according to the Congressional Budget Office which has said that cigarette excise taxes are the most regressive of all. With millions of families and businesses in Louisiana struggling to make ends meet, lawmakers should be cutting taxes rather than raising taxes on their constituents," he said.
McCalla urged Louisiana residents to contact their state representatives and tell them to cut wasteful, non-essential spending instead of raising taxes which won’t produce the anticipated offsetting revenues.