(Chicago IL – June 7, 2007) On Monday, June 4, the Tennessee House of Representatives sent a $230 million cigarette tax bill to Gov. Phil Bredesen. The following statement is from Steve Stanek, a research fellow for The Heartland Institute and managing editor of Budget & Tax News. You may quote from this statement or contact Stanek directly at 815/385-5602, email [email protected], for further comment.
For more information about The Heartland Institute, please contact Harriette Johnson, mainstream media specialist, at 312/377-4000, email [email protected].
“Despite a $1.5 billion budget surplus, Tennessee lawmakers have passed a 42-cent per pack hike in the cigarette tax, which means state tax collectors hope people keep smoking even as state health officials hope people stop smoking.
“Higher cigarette taxes are bad for a host of reasons beyond the absurdity of government relying on smoking even as it tries to stamp out smoking. Here are just a few of the other reasons:
- “Cigarette tax hikes almost always generate less revenue than expected as people reduce consumption or look for alternatives, including purchasing cigarettes at tax-free Indian reservations or from other states with lower taxes.
- “Higher cigarette taxes invite crime because smuggling grows as taxes climb.
“Philip Awe, chief of the alcohol and tobacco enforcement branch of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, has noted, ‘There are counterfeit cigarettes being made from tobacco fields in foreign countries and packaged as U.S. product or European product. The counterfeiters ship those cigarettes into the United States through various ports and distribute them to criminal organizations. The really bad thing with counterfeit cigarettes is there are no standards with their manufacture. They could be laced with anything.’
- “Cigarette taxes are regressive, which means they hit low- and middle-income persons harder than higher-income persons.
“Christopher Z. Mooney, professor of political studies at the Institute of Government and Public Affairs at the University of Illinois-Springfield and author of The Public Clash of Private Values: The Politics of Morality Policy (Chatham House Publishers, 2001), said this about cigarette taxes and other sin taxes: ‘They’re not huge generators of income; they don’t rise with inflation; they’re regressive. They’re everything you don’t want in a tax.’
“Everything you don’t want in a tax. Yet that is the tax Tennessee lawmakers favor. Tennessee residents can only hope Gov. Phil Bredesen, who proposed the tax hike, will see the error of his ways and veto the bill.”
