Excise Taxes

Reports

Bill would ban tax-free cigarette sales on reservations (NY)
New York Governor David Paterson signed a bill in December that is intended to help the state enforce excise tax collection on cigarettes sold on Indian reservations. The collection of cigarette taxes from Indian reservations has been a source of tension in the past; an attempt eleven years ago to enforce tax collection was met with protests and riots. This time, Gov. Paterson has taken a different approach, which puts the burden on cigarette manufacturers, rather than wholesalers, to guarantee that the tax will be collected. Before acquiring cigarettes from a manufacturer, wholesalers will be required to pledge that cigarettes will not be sold tax-free. Tribe members will still be able to acquire untaxed cigarettes, but non-Indians must pay the $2.75 state tax. By collecting the cigarette tax uniformly, it is estimated that the state will take in an additional $62 million a year to help counteract a state budget deficit. Native American leaders have responded with opposition, and plan to pursue negotiations or legal action. Click here to read more. Click here to read a statement in support of the bill from the American Lung Association of New York.

Beshear's budget plan gains support (KY)
Kentucky Governor Steve Beshear is proposing a cigarette tax increase that would boost the state cigarette tax, which is currently among the lowest in the country at thirty cents, to a dollar. Along with a plan to cut funding for most state agencies, the 70-cent tax increase would help the state meet a $456 million budget deficit. Through a speaking tour backed by a group of officials and advocates, Beshear is attempting to gain momentum for his proposal prior to the start of the 2009 legislative session. Last year, the House passed a 25-cent tax hike, which was subsequently rejected by the Senate. Because Kentucky has a high prevalence of smoking among adults, this tax increase has the potential to significantly impact the state’s health. Read more here.

Budget blues lead lawmakers to eye raising cigarette tax (FL)
In Florida, where the state cigarette tax has remained at 34 cents a pack since 1990, lawmakers are becoming more receptive to a tax increase to fix an ailing state budget. A bill is being proposed to increase the cigarette tax by $1. A one-dollar tax increase would put Florida’s cigarette tax slightly above the national average of $1.19. Representative Jim Waldman, one sponsor of the bill, is confident that the bill will pass despite past opposition, because of the state’s dire financial situation. In fact, to pacify those opposed to raising taxes, a provision in the bill terms the tax a “user fee,” rather than a “tax.” Waldman estimates that the tax increase could produce up to $1 billion in tax revenue for healthcare and education. Despite this optimistic outlook, Governor Charlie Crist has commented that he does not favor a cigarette tax increase, and would rather focus on other options. Click here for more information. Public health groups, including Florida’s branch of the American Cancer Society, the Florida Hospital Association and Safety Net Hospital Alliance of Florida have joined the push for the tax increase. Click here to read more.

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