It is absurd that a newspaper serving a state with an expected $5 to $9 billion budget surplus is advocating for any tax hike whatsoever (September 14, “Here’s a good tax”). Raising revenues when they are unnecessary will only encourage spendthrift behavior in the legislature. Governments that have the tendency to tax more also are inclined to spend more.
Even absent a surplus, cigarette tax hikes have three fundamental problems: they are a notoriously volatile source of revenue, they are regressive, and they discriminatorily target a minority of the population. The combination makes cigarette and other “sin” taxes a bad tax policy that nevertheless appeals to politicians wanting to raise revenue without angering the majority of taxpayers.
At $2 per pack, Alaska already has one of the highest cigarette tax rates in the country. The bulk of that burden falls disproportionately on low-income citizens. The state should focus on decreasing Alaska residents’ tax burdens and on keeping expenditures from growing out of control.
John Nothdurft ([email protected]) is the budget and tax legislative specialist for The Heartland Institute.