Gov. Bentley Patches Alabama Budget Hole with Cigarette Taxes

Published October 13, 2015

Alabama Gov. Robert Bentley (R) signed the state’s budget bill for fiscal year 2016 into law, raising the state’s sin tax on cigarettes by 25 cents per pack, from 42.5 cents to 67.5 cents, or about 59 percent.

Bentley’s budget also includes new taxes on pharmacies and nursing homes that he says will fund increased entitlement spending.

‘Doesn’t Seem Like the Answer’

State Rep. Mike Holmes (R-Wetumpka), a member of the Alabama House Ways and Means General Fund Committee, told Budget & Tax News higher taxes are not the way to solve the state’s budget problems.

Holmes voted “present” on the budget bill.

“I ran on a basis of no new taxes, and more fiscally responsible state government,” Holmes said. “The whole idea of increasing taxes at all or adding new taxes at a time like this doesn’t seem like the answer.

“We don’t have a revenue problem, we have a spending problem, and I solidly believe that,” Holmes said.

Holmes says lawmakers should cut waste and reduce spending in state agencies.

“It’s [waste] scattered throughout our state [that’s the problem], from the governor’s office to the various agencies,” Holmes said. “There’s waste in all of them; there’s fraud in all of them; there’s corruption in all of them; there’s a lot of cronyism in all of them; and it’s costing taxpayers a lot of money.”

Feeding the Beast

Holmes says throwing money at the budget problem is not working.

“The more we come up with new taxes or increase old taxes, we’re just feeding this beast that our state government has become,” Holmes said. “The more you feed it, the more it’s going to grow.”

‘Just a Talking Point’

Katherine G. Robertson, vice president of the Alabama Policy Institute, says sin tax proposals are often little more than politically expedient cash grabs.

“You hear a lot of talking points about how we should tax things that are bad for people, because then not only does the state get new revenue, people are actually healthier,” Robertson said. “That’s just a talking point.”

Robertson says Bentley’s sin tax proposal is more about budgetary health than public health.

“This is a governor and a situation where this has nothing to do with improving health,” Robertson said. “This is really about what we can tax without hearing a whole lot of public outcry.” 

Elizabeth BeShears ([email protected]) writes from Trussville, Alabama.