MONTGOMERY, Ala. --Alabama state lawmakers are currently reviewing a rough draft of the state's general fund budget—a picture House general fund budget chairman Steve Clouse (R) described as "bleak," he told the Associated Press. As such, the state legislature will consider not one, but two proposed increases to the current 42.5 cents-per-pack cigarette excise tax.
The most drastic increase, proposed by Governor Robert Bentley, would raise the cigarette tax by 82 cents. The resulting $1.25-per-pack tax would nearly triple the state's current rate and allegedly generate hundreds of millions of dollars for the state.
Clouse argued the governor's proposed tax rate is "just a little too high," in part because of lower excise taxes in states bordering Alabama: the state's current rate is 20 cents lower than Tennessee, 26 cents lower than Mississippi and 92 cents lower than Florida and five cents higher than Georgia.
"Some folks make an argument 'let's just go to a dollar,'" Clouse said. "But there's a fine line somewhere. Why not go to $1.50 or $2? We've got to be concerned about our border states and what they're charging because even though it's a legal product, a lot of our retailers along the borders depend on that revenue."
Retail organizations also expressed concerns about black-market smuggling: Alabama Grocers Association president Ellie Smotherman Taylor said the increase would hurt not only cigarette sales, but potentially all sales if smokers go to other states for cheaper cigarettes and purchase other grocery items on that trip.
State Representative Patricia Todd (D) sponsored a second, less-drastic proposal, which would raise cigarette taxes by 32.5 cents per pack. Though Clouse admitted there might be more support for Todd's proposal, he said the black market whould still be a concern.
"We can't get too far out of line because on the eastern side of the state and the northern side of the state, we already have so many residents now that are crossing over to buy lottery tickets," he told the news agency. "If they can buy their cigarettes for five to eight dollars a carton cheaper than Alabama, we get into a bootleg situation and we lose the whole sale instead of what we're getting now."
House Speaker Mike Hubbard (R) promised that lawmakers would first try to solve the budget deficit with cuts, not raising taxes.
"The last thing we want to do is to raise taxes, that would be an absolutely last resort," Hubbard told AP. "We're going to see what's not an essential service of government and see if we can trim back or eliminate some areas before we even talk about any taxes, but obviously we're responsible for putting out a budget."
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