MADISON, Wis. -- The executive director of the National Association of Tobacco Outlets (NATO) has urged Wisconsin Assembly Speaker Mike Huebsch and other state Republicans to reconsider their decision to compromise with Democrats on a cigarette tax increase of $12.50 per carton.
Even as recently as June, Speaker Huebsch appeared at the Wisconsin Taxpayer Rally, praising Minnesota for holding the line on taxes and pledging to do the same for Wisconsin, said Tom Briant, executive director of NATO, in the most recent edition of the NATO E-News Bulletin. [image-nocss] He said he was determined to help Wisconsin drop off the list of top-10 states for high taxes for the first time since 1964. Moreover, he has made promises to the Wisconsin business community that he would stand firm against tax increases. We supported his campaign. We put our trust in him and many other Republican legislators, and now it appears they are turning their backs on us.
Contrary to what some legislators believe, the majority of smokers do not give up the habit because of tax increases, Briant said. Smokers get fed up with paying higher and higher taxes, and they turn to other sources for cigarettes, like the Internet and the black market. Or they just drive over the border to a neighboring state with lower taxes. The people who end up getting hurt are small retail business owners and other tobacco outlets, who will see a significant drop in sales.
In addition, the state loses the tax revenue from those sales, Briant added. There is strong evidence that there is a 'tipping point' on how much taxation smokers will bear. After New Jersey raised its cigarette tax in 2006, it actually collected $23 million less the next year. Just over the border in Delaware, where cigarette taxes are much lower, sales increased, thanks to the influx of traffic from New Jersey. South Dakota and Maine also are reporting that revenues from cigarette tax increases have fallen far short of their expectations. Lawmakers are discovering what we've known all alongthe tobacco goose is running out of golden eggs.
Briant urged business owners and anyone else concerned about the effects of the tax hike to contact Huebsch and Republican legislators, asking them to stand firm against the tax increase. It's not too late for them to reconsider the compromise on the cigarette tax, he said. It's understandable that the protracted debate over the budget is wearing on the Republicans, but abandoning the Republican Party's position of standing up for taxpayers would be a terrible mistake, given that the 2008 election season is just around the corner. They simply will lose all credibility with voters.
Meanwhile, in Oregon, NATO has begun working with major tobacco manufacturers, including R.J. Reynolds and Philip Morris, to oppose an 84.5 per pack cigarette tax increase and a proportionate OTP tax increase that will appear on the state's November 6 ballot. As a first step, NATO has partnered with R.J. Reynolds Tobacco to ship thousands of alert sheets to NATO member stores to hand out to customers to oppose the ballot question.
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