Tax update
Cigarette tax increase bills move in Senate
March 23, 2006
By Andy Sher Nashville Bureau
NASHVILLE – Two bills that would increase Tennessee’s tobacco tax began moving in the Senate Wednesday, but proponents disagree about how much to raise the levy and how revenues should be spent.
Members of a special Senate Finance Committee subcommittee on tobacco taxes recommended both tax-hike proposals to the full panel.
A bill sponsored by Sen. Doug Jackson, D-Dickson, would boost the current 20 cent-per-pack tax on cigarettes by 43 cents and use the estimated $227 million to cut the state’s 6 percent sales tax on food to 3 percent.
A bill sponsored by Sen. Rosalind Kurita, D-Clarksville, would raise tobacco taxes by 71 cents per pack. It would generate an estimated $345 million per year with $100 million going to health care.
But Senate Finance Committee Chairman Doug Henry, DNashville, said he is concerned about the stability of revenues from higher cigarette taxes.
“I’m going to get some experts to come down and talk about it,” he said. “That’s all I know to do.”
Cigarette manufacturers R.J. Reynolds and Altria, which owns Phillip Morris, did not respond to requests for comment.
Tennessee is a tobacco- growing state but has the third lowest tax on cigarettes in the nation, said Sen. Kurita, a U.S. Senate candidate.
Money raised from a higher tax on tobacco could be used to boost community-based health care and to help uninsured and uninsurable Tennesseans that were cut from TennCare, she said. Other funds possibly could go toward lowering the sales tax on food, Sen. Kurita said.
Sen. Jackson said all new tobacco revenue from his bill would go toward reducing the state portion of the sales tax on food. “Every citizen in the state would benefit from a lower tax on food,” he said.
Earlier this week, the House companion bill to Sen. Jackson’s plan was delayed in a subcommittee.
House Speaker Jimmy Naifeh, D-Covington, and Gov. Phil Bredesen have said they do not back an increase in cigarette taxes at this time. Gov. Bredesen has said he would consider a cigarette tax increase to fund health care in the future.
E-mail Andy Sher at asher@timesfreepress.com BILLS’ PROVISIONS Sen. Doug Jackson’s bill would increase the state’s current 20-cent-per-pack cigarette tax by 43 cents and raise an estimated $227 million per year. The cigarette tax would increase by 1 cent per pack each year.
Sen. Rosalind Kurita’s bill would boost the cigarette tax by 71 cents per pack. An estimated $100 million of the $345 million in new revenue would go toward health care, while the remaining money could go for other purposes.
Could part of tax go up in smoke?
From: Robert Pritchard
To: JJ Knox news Stambaugh ; Tom Knox news Humphrey
Sent: Friday, March 03, 2006 12:33 PM
Subject: Could part of tax go up in smoke Article
Gentlemen,
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I read your article today after a friend of mine, sent it to me. There are a few points though I think need to be, as the Tennesseans for Fair Taxation would put it, balanced more evenly.
1.) The comment made by Nancy Stewart of the League of Women Voters, and I quote ” Our cruel and unjust food tax makes it difficult for families to feed themselves” is not completely balanced. The way I see it is that higher food prices, cause your total food tax amount to be higher. You see, everything in this country moves by Air, Rail or Truck and when the price of gas goes up everybody from the farmer to the store have to raise their price to stay in business, while the Oil companies make millions and billions in Quarterly profits. The price of everything, including utilities has gone up, everything except wages. Gentlemen that is what makes it difficult for families to feed themselves.
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2.) The Statement that Stewart and others rammed home the effects of Tennessee”s sales tax on the poor by pointing out that Tennessee”s average food tax is 8.4% while most states don”t tax food at all. It is true that most states don”t tax food, but those same states also have a State Income Tax, which by the way is a big agenda item for the TFT per their website.
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3.) Tennessee, in 2004, had the third-lowest cigarette excise tax in the nation, but out of 51 states, Tennessee was the 25 highest in collection of State, City and County excise taxes, with a total of $112,754,110.00 dollars.
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4.) As far as Julie Henderson from Solutions Inc and her comment that it would help curb health-care cost by discouraging smoking, if every one in Tennessee quit smoking, how is the State government going to make up for the lost revenue from taxes on cigarette sales and especially the revenue they get from the Master Tobacco Settlement Agreement. Since that agreement, Tennessee has collected $867,435,441.00 up to 2004. Where is written proof, a independent study, untouched by the Anti-Smoking Groups, that shows the health cost for smokers?
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In my opinion, Tennesseans for Fair Taxation is not being fair to smokers. They are being fair to whoever donates the money to there group. Did you know that if you go to their website, the only way to contact them, you can call them on the phone, but the only way to sit and write them about your concerns, a hard copy of what you said and what they might say, is by making a donation. Money, that is what the Anti-Smoking groups want the most, because without money, they cannot run their ads and they cannot lobby for tax and anti-smoking laws that they think are fair to every Tennessean. The reason states bordering Tennessee have lower food and sales tax, is because they have a State Income Tax. Something that TFT didn”t mention, and per their website TFT wants a State Income Tax. It is not fair to take a part of the tax burden from every Tennessean and put in on 22 to 25% of Tennesseans, because they choose to use a legal product.
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Attached is a chart of what each state cigarette tax is and how much they collected in 2004. that is my source.
Very Respectfully
Robert F. Pritchard – mailto:info@yessir-tn.info
Southeast Regional Director of The Smoker”s Club, Inc.
YesSIR of Tennessee – http://www.yessir-tn.info/
The Smoker”s Club, Inc. & Video Archive – http://www.smokersclub.com/
Smokers Rights Newsletter – http://www.smokersclubinc.com
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Could part of tax go up in smoke?
Bill supporters urge halving levy on food, upping cigarettes” rate
By TOM HUMPHREY AND J.J. STAMBAUGH, tomhumphrey3@aol.com stambaugh@knews.com
March 3, 2006
Supporters of proposed legislation that would drop half of the state”s sales tax on food in exchange for an increase in cigarette taxes gathered Thursday in Knoxville and Nashville to push for the initiative”s passage.
“Our cruel and unjust food tax makes it difficult for families to feed themselves,” said Nancy Stewart of the League of Women Voters during a press conference at the Knoxville office of Tennesseans for Fair Taxation.
Stewart and other speakers rammed home the effects of Tennessee”s sales taxes on the poor by pointing out that Tennessee”s average food tax is 8.4 percent while most states don”t tax food at all.
Tennessee also has the fourth-lowest cigarette taxes in the nation, they said, and the proposed bills in the state Senate and House of Representatives would cut the state tax on groceries by half and make up the revenue shortfall by adding an additional tax on cigarettes to the tune of about 43 cents a pack.
Julie Henderson, a community organizer for the nonprofit agency Solutions Inc., said the legislation would help curb health-care costs by discouraging smoking while also “providing relief for families who are struggling to put nutritious meals on their tables.”
In Nashville, a similar event was held outside the Legislative Plaza with two legislators and 10 TFT supporters on hand. Reps. Joey Hensley, R-Hohenwald, and Gary Odom, D-Nashville, said they think the proposal has a reasonable chance of passage.
On the other hand, House Speaker Jimmy Naifeh said he had doubts that the proposal was fiscally sound and could cause state budget problems.
“I”m not convinced that we can make up (the loss of revenue from) the sales tax on food with a tobacco tax increase,” Naifeh said in response to questions. “There”s a gap there that I don”t think we can recover from.”
The tax swap would cut the state food tax from 6 percent to 3 percent, but local government add-ons wouldn”t be affected, leaving a maximum local food tax of 5.75 percent, according to figures released by the TFT group.
The bills are bipartisan, with sponsors including Knoxville Reps. Joe Armstrong and Harry Tindell, both Democrats, as well as state Sen. Tim Burchett, a Knoxville Republican.
J.J. Stambaugh may be reached at 865-342-6307. Tom Humphrey may be reached at 615-242-7782.
Senators,? I sure hope you take the time to read what I”m about to say.
Tobacco Taxes and Payments for Tennessee
Tennessee”s excise tax per pack of cigarettes: $0.200
Tennessee”s excise tax collection for the fiscal year ending June 2004: $112,734,000
Sales tax on tobacco products: 8.25%
Tobacco products sales tax collection for the fiscal year ending June 2004: $145,281,000
Local tax on tobacco products: $20,110
Federal excise tax per pack of cigarettes: $0.39
Total federal excise tax collections in fiscal year 2004: $7,778,569,117
MSA Payments Received by Tennessee Since the MSA was Signed Through Fiscal Year 2004: $867,435,441 ( I liked this one, over 8 MILLION DOLLARS)
Number of six-packs of beer that must be sold in Tennessee to produce the same state excise tax and settlement revenue generated by one carton of cigarettes: 60
Number of bottles of wine that must be sold in Tennessee to produce the same state excise tax and settlement revenue generated by one carton of cigarettes: 19
Smokers do! This is a tax on smokers, not tobacco companies – and in state after state, “smokers” is the only group being singled out to pay.
Smoker tax increases impose an unfair and selective tax burden on hard-working Americans engaging in a legal behavior. Exorbitant increases in smoker taxation is tax profiling. Just consider that:
- In 2004, government pocketed more tobacco revenue per minute ($58,940) than the average working family brought home in a year ($41,754).
- Since January 1998, the average per-pack price increased $1.78 – from $2.04 to $3.82 in 2004.
- Based on 2004 figures, more than 37 percent of adult smokers had incomes of less than $25,000 annually.
- Adult smokers make up about 22 percent of the population, yet smokers as a group are the only ones singled out for more and more “sin” taxes.
Tobacco excise taxes are regressive, unfairly forcing adult smokers to pay a greater percentage of their incomes in excise taxes than those in higher income groups. Because everyone pays the same rate regardless of income, Americans in low- and moderate-income brackets pay a greater share of their income in taxes simply because they have chosen to use a legal product. In addition, about 22 percent of the U.S. population pays 100 percent of the tobacco taxes, which is another inequity since all Americans share in the programs and benefits financed with tobacco tax dollars.
WOW! Government pocketed nearly $59,000 per minute. That is more than I made all last year.
Lastly, I would like for you to really do your homework/research and be sure that you know in your gut, what could happen if you push that YES button to vote. Here?is some facts, some opinions and some estimates, but they are still important.
Consequences of Excessive Tobacco Taxes
Not only is more than enough money already available to properly finance tobacco control, further increases in tobacco excise taxes could result in negative consequences.
Higher cigarette taxes are forcing smokers to adopt tax-avoidance behaviors, resulting in lower than expected revenue to the states, lower MSA payments and poor enforcement of minimum-age sales laws. Comprehensive education and enforcement of existing laws are the most effective methods to reduce levels of illegal smoking by minors.
High tobacco excise taxes encourage cross-border smuggling and illegal sales. They also encourage smokers to seek alternative sources, such as the Internet, to purchase their cigarettes, which leads to decreased state tax revenues. The U.S. Bureau of Alcohol, Tobacco and Firearms (BATF) estimates that since July 2002 $1.5 billion has been lost in state and federal taxes, due to illegal activity and online sales.
Illegal Internet and mail-order sales are the fastest-growing businesses in the U.S. according to the BATF, with online retailers selling an estimated $5 billion in tobacco products.
High cigarette taxes encourage some consumers to turn to the black market. And, smugglers are eager to supply the product, since they stand to make about $2 million on a truckload of bootlegged cigarettes.
Retailers and wholesalers have watched sales decline as cigarette prices have increased. Since 1998, the average price of a pack of cigarettes has increased by 87 percent (from $2.04 to $3.82).
Hey, Lower MSA payments, I think I said that earlier this evening, well yes in this email, but I was referring to the interview I gave this evening about your Bill # 3626 over the telephone.
Senator Burchett, your from my neck of the woods. see you on TV all the time, seems like your always trying to help the citizens of Tennessee. BUTT that must be the better class of citizens, because smokers are treated like second class children, red headed step children, why you might even classify us like another group class of people from WW II, No not the Nazi”s, that is more like the Anti-Smoking Groups, no we, us smokers are the ones the Nazi”s controlled.
I”ll leave you with my final thought, We, the smoker”s of this State, of this Country, and of this World cannot afford to fight back at the Big Anti-Smoking lobbyist groups. And do you want to know why we cannot afford to fight, scroll back up to WHO PAYS?CIGARETTE TAXES. We cannot afford to fight the big fight, because we give most of our money to you in the form of cigarette taxes.
I ask you to think about what you are doing and what impact it may have, before you go through with this bill.
Very respectfully,
Robert F. Pritchard – mailto:info@yessir-tn.info
Southeast Regional Director of The Smoker”s Club, Inc.
YesSIR of Tennessee – http://www.yessir-tn.info
The Smoker”s Club, Inc. & Video Archive – http://www.smokersclub.com/
Smokers Rights Newsletter – http://www.smokersclubinc.com
As cigarette bill dies in Senate committee, smokers divided on issue
March 22, 2005
Scott Fralick for News 2 at 4
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Cigarette smokers in Tennessee escaped paying an extra 40 cents per pack on Tuesday. The Senate Finance Committee refused to pass a bill that would have pushed for the increase. Surprisingly, some smokers supported the proposed hike.
State Sen. Rosalind Kurita has her own kind of tobacco habit. Every legislative session for the past four years, she”s tried to pass a cigarette tax in Tennessee. Every year she”s failed, as she did again this year. But she told News 2 that she”ll keep trying. Kurita is also a nurse and passionate about the issue. She wants increased taxes on cigarettes to stop kids from lighting up a lifetime of addiction.
“I”m trying to make it so expensive that children won”t begin the habit,” said Kurita.
But would it work? News 2 talked with some smokers in the Legislature to find out whether or not they thought increased taxes on cigarettes would stop kids from smoking. Transportation lobbyist Mike McClary doesn”t think so.
“You could raise the cost of cigarettes to $10 and the kids that want to smoke are just going to steal them,” said McClary.
McClary believes kids will always find a way to get cigarettes, so he doesn”t think a tax-fueled increase in price would stop them. But he would be willing to pay the tax anyway, if it went directly to teaching kids not to do what he does – smoke.
“The best way to inhibit kids from smoking is through education,” he said.
Smoker Terri Dunn called the proposed tax ”outrageous” and doesn”t think it would keep kids from smoking.
“I don”t think it would stop them, no,” said Dunn. “It didn”t stop any of us.”
For now, Tennessee smokers can keep lighting up for less. Taxes on cigarettes in the state are among the lowest in the country. Smokers pay 20 cents per pack in taxes. In Georgia, it”s 37 cents. In Alabama, the tax is 42 cents, and in Arkansas, it”s 59 cents per pack.
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http://www.wkrn.com/
