Tobacco tax hike looms for Georgia — again

At Leona Helmsley’s trial on charges of tax evasion in 1989, her housekeeper testified the former hotel magnate haughtily claimed that, “only the little people pay taxes.”  Thanks to action by soon-to-be ex-Gov. Sonny Perdue, and many of his colleagues in the Georgia General Assembly, many of us “little people” likely will be hit with higher taxes.

In June, Perdue signed legislation creating the mis-named “Special Council on Tax Reform and Fairness for Georgians,” an 11-member group that has been traveling the state, meeting with everyone from special interest groups looking to preserve tax exemptions carved out for them, to concerned citizens hit hard by ever-increasing tax burdens.

The council and its work should be viewed skeptically by citizens of the Peach State; especially given Perdue’s record for raising taxes. Shortly after his inauguration in 2003, for example, Perdue proposed a $762 million tax increase. The Governor had to choose between tough spending cuts and raising revenue to plug the deficit hole. Expediency won out and taxes went up.

Unfortunately, history appears ready to repeat itself; as the tax “reform” council reportedly is considering new taxes on services such as dry cleaning and hair cuts, as well as the always easy, “sin tax” hikes.

A tax hike on tobacco has been bantered about during the past few sessions of the state legislature. Groups and politicians supportive of the effort wore “pass the buck” buttons in the halls of the Capitol, pushing for an increase in Georgia’s cigarette tax from 37 cents to $1.37 per pack.

Both candidates for governor this year – Democrat Roy Barnes and Republican Nathan Deal – have indicated that they would be open to a cigarette tax hike.  To Deal, the tax is palatable because it “is one of the areas where there is more public acceptance.” That may be true, but what is popular with the masses may not always be sound policy.

The claims made to justify these tax hikes range from a desire to deter smoking, particularly among youth, to increasing revenues.

Invoking the “it’s for the children” rhetoric in any public crusade attracts support, but whether or not cigarette taxes deter youth from smoking is not clear. According to the Tax Foundation, a non-partisan think tank, young people are just as likely to buy a pack of cigarettes after as before a tax hike.

During these tough economic times, politicians have justified increasing cigarette taxes to offset falling revenues. It may sound like a good idea, but within the last two years, four states and the District of Columbia have increased the tax on tobacco, to decidedly mixed results.

When the legislatures in New York and New Jersey increased taxes on tobacco, residents traveled across states lines to Pennsylvania to purchase cheaper packs. Florida and Maryland both saw a significant drop in sales with the passage of cigarette tax hikes. After a fifty cent increase on cigarettes in 2009, the District of Columbia expected to take in less revenue from cigarette taxes than the previous fiscal year.

If the dollar tax hike is passed in Georgia, many smokers will simply cross state lines to any one of the four states bordering us that have a lower cigarette tax. Lost revenues would be made up from either spending cuts or .  .  .  more tax hikes.

The tax council is due to present a list of recommendations next January, just as the new session of the state legislature is beginning and as a new governor is sworn in.  While Georgia certainly is in need of a fairer tax system, the next governor and members of the General Assembly should be made to understand that hiking taxes hardly qualifies as “tax reform.”  Demonizing a particular segment of society may make politicians and nanny-state advocates feel good, but it is anything but a panacea for the state’s fiscal problems.

37 comments Add your comment

K Croom

October 25th, 2010
6:16 am

Well stated, brother Barr.

Tim Parker

October 25th, 2010
6:47 am

Sin taxes usually attack the lower middle class and working poor’s lifestyles. While not a smoker myself, I have several friends that are. It won’t stop them from smoking. In Augusta, we have the luxury of traveling just across the Savannah River to North Augusta when Georgia stupidly imposes unfair taxes. Savannah and Columbus, other major cities in Georgia, have the same luxury. This just highlights the problem with politics in Georgia: the constant focus on metro and suburban Atlanta. Maybe the three aforementioned cities should succeed from Georgia. I’m sure South Carolina and Alabama won’t mind.

Joel Edge

October 25th, 2010
6:52 am

I find it odd that while the drums keep beating for cigarette tax increases, at the same time the calls for legalizing marijuana are also increasing. Looking for another “revenue stream” maybe. You would think that the government would be ashamed to be profiting from the awful addiction of tobacco use. I guess if there’s enough money involved….

dd

October 25th, 2010
6:55 am

Go ahead Sonny raise them. ASAP!!

I work in the roll your own business.

That’s just more money in my pocket and a larger Christmas bonus.

Ben

October 25th, 2010
7:05 am

I believe many of us will be glad when Sonny finally leaves Atlanta to “go fish” permanently. One of the new shortest books in the world will list Sonny Perdue’s accomplishments as Georgia Governor.

The Little People

October 25th, 2010
7:11 am

Add one book to the Barr Library: The one with the little people who rope-tied Gulliver. What were they called? Lilly-livered something or other. I do know that they were 1/12th the size of human beings. That’s why the Lilliputians captured and bound Gulliver. They theorized that he must have had an enormous schvanztooker.

Which brings up the proposed tobacco tax. Cigars have tobacco in them, and the Lilliputians’ only access to marital aids was with those enormous Havana Splendidos. A tax would have had more impact on the birth rate than a Papal Edict. A cigar tax would have deterred the very act of creating children. They would have been finished.

Well you’ll have to read the rest of Gulliver’s Travels; I wont ruin it for you, but once again Bob Barr shows us that a cigar-tax is never just a cigar-tax, indeed, a cigar-tax almost always becomes a socio-economic monkey wrench in the wheels of the libidinous evolution of fictional characters everywhere.

Silverchief

October 25th, 2010
7:35 am

Isn’t Sonny a former Democrat? Will be glad when he is gone.

Redneck Convert (R--and proud of it)

October 25th, 2010
7:53 am

Well, I reckon us tobacco users are the new N____s of the South. I might of knowed they’d find somebody else to pick on after these Equal Rights laws got passed. You can’t even light up in a diner in GA anymore. Why don’t they just charge the extra tax on the kids that buy cigarettes, if they’re trying to make it cost too much for kids to smoke?

sharecropper

October 25th, 2010
8:00 am

If these people want to smoke and dip themselves to horrible deaths, then it’s none of my affair. Until they want medical care on the cuff. But there is no reason not to tax the dickens out of booze and alcohol, since it never seems to deter their use. If oil companies can raise gas prices out of sight, knowing nobody will leave their car at home, then the taxes are fine. but on taxes in general, as long as the Republicans have taken the position of no new taxes, for anything, including fighting wars, America’s days of greatness are over. We will never again aspire to great things or great initiatives. Because they cost money, and Americans have been convinced that not only should we not have new taxes, but no taxes at all, and after Bush, everything should be free. Republicans have put us on a steep slope to mediocrity, and it is not recoverable. Be proud of yourselves.

carlosgvv

October 25th, 2010
8:05 am

When I started smoking years ago, the tobacco companies already knew their product was dangerous but said nothing. Now, old smokers and former smokers are getting sick and costing our healthcare system billions of dollars. So, raise those taxes as high as you can and stop companies from selling poison to people too dumb to know any better.

AJ

October 25th, 2010
8:14 am

@Tim Parker – I believe the word you’re going for is “secede” not “succeed”. Used in a sentence, “If every Georgia city outside of Metro Atlanta were to secede, Georgia would succeed.”

Reginald Landers

October 25th, 2010
8:31 am

I own The Chief’s Cigar in Helen, GA and just barely survive….no salary, no profit-sharing, no health insurance, zero, zip, nada!!!

Except for my locals who come and sit and smoke, I have to explain to almost every one “Why cigars are so expensive in Georgia”….and they are dumb-founded because they have no idea there is a 23% Georgia Cigar Excise Tax on EVERY cigar sold in the state. Add 7% Georgia Sales Tax, which I include in the price of every cigar, and now I’m 30% higher than the internet/mail order shops out of Florida, North Carolina and Pennsylvania. With that said, I estimate 85%-90% of the premium cigars consumed in Georgia are purchased from out of state.

The point is this: Besides making it almost impossible to make a living with a small legitimate business, the State of Georgia collects very little revenue. Either we have some really stupid politicians or this is about social engineering….maybe a little of both.

Common Man

October 25th, 2010
8:40 am

When I can’t balance my budget at home, I can’t waltz into my manager’s office and demand a raise. I have to live on what I bring home and spend accordingly. We need to wake up as voters and elect responsible leaders that won’t spend money they don’t have and that will just go back to the well with higher taxes (often described with cute names) to plug the revenue holes in their fiscally unsound sinking ship.

Stogey Man

October 25th, 2010
8:46 am

Reginald Landers: JRCigars.com is the Georgia cigar smoker’s best friend. I have about 800 premium cigars in my humidors in case Georgia tries to impose an Internet sales tax. IMO, Georgia’s tobacco tax policy has been formulated by morons.

godless heathen

October 25th, 2010
9:46 am

Sure raise cig taxes through the roof and then discourage the activity whenever possible. But remember, government never gets by with less revenue. When all the smokers have quit or died off, the revenue will have to made up somewhere else and all the anti-smoking crusaders will be paying the taxes in some other way.

Mike

October 25th, 2010
9:56 am

This is always the way with the Gov. spend spend spend.

The Governor had to choose between tough spending cuts and raising revenue to plug the deficit hole. Expediency won out and taxes went up.

Grob Hahn

October 25th, 2010
10:55 am

What’s really funny is how close cigarettes are getting to the cost of marijuana! But personally, I would rather pay a tax on pot than go to jail, which isn’t the case with tobacco. Since tobacco creates a real chemical dependency raising taxes on it is clearly a measure designed to profit from addicts. Presently we profit from the illegal addicts with our “justice” system. I’m positive they would rather be part of the revenue system instead. If Sonny was really so concerned about farmers and the like, he’d start moving to legalize and regulate marijuana NOW before Florida does. The tourism alone would pull us right out of the hole. L5P is already a virtual Amsterdam and the state doesn’t see a dime of it. The income potential is literally staggering. Of course you’ll have those who claim it will drive crime upward. So far where marijuana has been decriminalized and/or legalized this has NOT happened. When alcohol prohibition was lifted crime went down. It’s time for our “leaders” to get their act together and quit trying to inject their personal moralities into the public at large. That is not supposed to happen in American government. Yet here, in Georgia, you have politicians who literally quote verses and such to make it known they are absolutely imposing their faith onto us. For them it is the “right” thing to do. But adding your religion to your government position is absolutely wrong. You represent the people, NOT your own interests.
Grobbbbbbbbbbbbb

Supreme Being

October 25th, 2010
10:56 am

Sonny did not have the stones to make the tough spending cuts and took the easy way out by raising taxes. But he would walk on glass in bare feet to stop Sunday liquor sales. Good riddance

Really

October 25th, 2010
11:00 am

Bob raising cigarette taxes is a win-win. Either more money for the state for education or less smokers and less health care costs. NY, NJ and DC are not fair comparisons. Perhaps Augusta and Columbus will cross the border but the money from smokers is from Metro Atlanta and folks here won’t pay the gas to go to Anniston to get a carton of cigs.
Your view is no new taxes…hell no taxes ever….but the reality is we need gov’t…you want a weak anarchy find a 3rd world country and you will run back to this nation and its gov’t.

Reality

October 25th, 2010
11:06 am

Once again, the republicans actions do not agree with their words.

The republicans are “supposed” to be the part of lower taxes, less government, etc. However, once in office they RAISE taxes, especially on the middle class and also they increase the size of government.

The only question that I have…… when will the voters of Georgia wake up and realize this????

Karl Marx

October 25th, 2010
11:09 am

Everyone better watch this so called tax reform commision. It is just a cover for Service taxes. Taxes on doctors, lawyers haircuts plumbers plus they will add the sales tax back to food. Thanks Rebublicans.

Disgusted

October 25th, 2010
11:14 am

Everyone better watch this so called tax reform commision. It is just a cover for Service taxes. Taxes on doctors, lawyers haircuts plumbers plus they will add the sales tax back to food. Thanks Rebublicans.

Not only that, but I suspect one recommendation will be for an increase in the state sales tax rate across the board, accompanied by a small reduction in the top end of the state income tax. Gotta take care of those high earners, you know. You can’t be a real Republican without that.

Native Atlantan

October 25th, 2010
11:23 am

@Tim Parker — are you serious? The folks under the gold dome don’t give a shoot about metro Atlanta and have been tearing it down for decades.

A. J. C . Smith

October 25th, 2010
12:11 pm

I’m curious about the return on our tax dollar. Of every dollar raised in tax revenues, how much comes back to the citizen in terms of parks, highways, state (needed) services, etc. And how much goes to fund legislative trips, meals, junkets, health benefits, etc., etc., stc. Very little, I assume.

Dr. Pangloss

October 25th, 2010
12:14 pm

Tobacco Subsidies in the United States totaled $944 million from 1995-2009. As per the Farm $ubsidy Database at http://farm.ewg.org/progdetail.php?fips=00000&progcode=tobacco.

Why are we subsidizing something that kills over 400,000 Americans each year?

Tax the snot out of tobacco and get some of it back.

Swede Atlanta

October 25th, 2010
12:20 pm

Bob, your argument is a twist on the “race to the bottom”. Because neighboring states may have lower tobacco taxes Georgia residents MAY go out of state to purchase cigarettes and that might more than offset any incremental tax revenue raised as a result of a higher “sin” tax.

I have no doubt there would be some that live within a short distance of a neighboring state to make their tobacco purchases out of state. And some would simply stock up when they were out of state. As to whether this would result in lower tobacco tax revenues or not is speculation.

But Georgia should not be afraid to be a leader in this area. Neighboring states are suffering the same budget shortfalls and seeing Georgia take a stand on this might encourage them to do the same.

Tobacco use costs the state and the private businesses considerably in the form of more illnesses, earlier deaths and lower employee productivity. In addition inconsiderate smokers of which there are many use private and public spaces as their ashtrays as they drop cigarette butts, cigarette packages, etc. at will.

There is a societal cost to its use so anything we can do to reduce it will benefit everyone, the smoker included.

Jefferson

October 25th, 2010
12:30 pm

Only a greedy coward would support a tax on addicts only.

Ex-smoker in Atlanta

October 25th, 2010
1:39 pm

I stopped smoking almost a year ago. Let’s pass laws to drastically raise the tax on cigarettes! Five dollars a pack! After all, the majority always wins in the legislature – minorities have to go through the courts and sometimes a President with a backbone will issue executive orders. Not the case here in the US.

Ezra

October 25th, 2010
1:54 pm

Lets put a tax on lipstick. $5 a tube or an equal amount. I really hate anyone who targets a group of people. Hey lets tax someone for not being white.

nelson

October 25th, 2010
1:57 pm

Right now a truck load of illegal cigarettes would net the driver a profit of $2,000,000. The way I see it, all those cigs bring zip to the government in taxes. The driver pays zip on $2,000,000. It looks like a lose -lose situation for the revenue collectors. That being said, if the truck driver gets caught then he gets free room and board for a few years.

The solution[there always is a solution] is no tax on cigarettes at all. That way the tobacco growers, the cig manufactures and the mom and pop operations that sell them all make out. And of course the smoker , will expire when he/she gets to retirement age from smoking, saving medicare a whole bundle. Stick with me I will straighten it all out, nice and simple.

Ghostrider

October 25th, 2010
2:03 pm

Never….Never…. ever trust what a Politican has to say, they are liars and thieves. Can’t stand any of them, Demo., Rep., Libs…it dont matter, all they want to do is get the hands in our pockets.

The Little People

October 25th, 2010
5:09 pm

I think what Ghostrider is trying to say is that what it all boils down to is politicians have one hand in our pocket and the other one is playin’ a piano.

coolpillow

October 25th, 2010
6:14 pm

I am a Georgian and a smoker.
I used to buy my cigarettes from an Indian Reservation until CONgress passed a law that it was illegal to ship over state lines (Unconstitutional).

Now- I travel to South Carolina every few months.
Nice drive- and smokes are half price.

In this economic climate- the LAST thing that should be done is to impose $1 a pack tax on cigarettes in Georgia.

I predict a BIG upswing in crime in EVERY city!

stevieb

October 25th, 2010
7:43 pm

Bob you repeat the same old tired right-wing arguments against tobacco taxes and leave out many important issues. The healthcare costs from tobacco use are born by all of us. This cost is worse than a tax increase and can be directly tied to tobacco use. Florida had the guts to tie those costs to those who cause them. Maybe if we do it too the other 4 border states will also. No where (nor in all the above posts) is mentioned the real reason tobacco taxes have not kept up with inflation. The tobacco lobby. All this whining about taxing addicts is disgusting. These people all made a choice. There are plenty of stop smoking programs out there for them. Our forefathers didn’t need income taxes. They taxed luxury items (whiskey, coffee, tea, etc,) Your calling them “sin” taxes doesn’t make then suddenly unacceptable. They were acceptable in 1790. They are most appropriate now.

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October 26th, 2010
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Intown

October 26th, 2010
11:41 am

Both of my grandfathers died prematurely from cigarette smoking. Tax tobacco to death for all I care. Revenues be damned.

John

October 26th, 2010
1:49 pm

Bob,

There are 5 states that border Georgia (AL, TN, FL, NC , SC)