Alabama Lawmakers Angling for Cigarette Tax Hikes

Two proposals would bring 32.5-cent, $1-per-pack increases, respectively

MONTGOMERY, Ala. -- Two Democratic state lawmakers have filed proposals to raise Alabama's cigarette taxes, one by 32.5 cents per pack and one by $1 per pack, in a bid to fill what could be a $400 million shortfall in the state General Fund next fiscal year, reported the Birmingham News.

State representative Patricia Todd filed a bill that would raise the state cigarette tax from 42.5 cents to 75 cents per pack, which would raise roughly an estimated $75 million a year for the General Fund.

Todd has proposed cigarette tax increases every year since 2008, and each plan has died, the report said. But several top-ranking Republicans--the party dominates the state legislature--said they doubted the legislature would raise cigarette taxes in the 2012 regular session.

But Todd said she thinks there's a 60% chance that the gloomy budget outlook for fiscal 2013, which starts October 1, will motivate legislators to pass her proposed cigarette tax hike to ease what could be severe cuts in state services.

"I think we'll have a better shot this year, because of the budget being so bad," Todd told the newspaper. "I think we have chopped everything we can chop."

State representative Joe Hubbard filed a bill to raise the state cigarette tax by $1 a pack, which would raise roughly an estimated $230 million a year, according to the report, citing the Legislative Fiscal Office. All the money raised by Hubbard's bill would go to the state Medicaid agency, which is supported by the General Fund and provides health care for lower-income and disabled people.

Hubbard said raising cigarette taxes would be a fair way to support Medicaid, since some of its spending goes to combat health problems caused by smoking. "This is not an unfair tax. It is a tax on the people who engage in activity that costs every taxpayer," he said.

"My goal here is not to raise taxes. My goal is to make sure we provide necessary services, and that if we must raise revenue, we do so in a way that the revenue is raised fairly and raised responsibly," Hubbard said. "I think this is a proposal that does that."

David Sutton, a spokesperson for cigarette manufacturer in Richmond, Va.-based Philip Morris USA, said it would be unfair to fill a revenue shortfall by taxing a minority of taxpayers. "You're talking about a tax increase on one segment of the population to provide funding to the General Fund, which benefits the entire population of the state," he told the paper. "That's an issue of taxing equity."

Sutton also said raising Alabama's cigarette tax would encourage smokers to cross state lines to buy cigarettes, hurting sales at convenience stores and other outlets in Alabama.

Alabama's current state cigarette tax of 42.5 cents per pack was, as of November 17, the fifth-lowest among the 50 states, according to the report, citing the National Conference of State Legislatures. The median state tax was $1.29 per pack.