Tuesday, February 02 2010
Tony Tortorici, IPCPR
Boston, MA -– Massachusetts Governor Deval Patrick submitted a $28.2 billion state budget for fiscal 2011 last week. To partially offset the three percent increase over 2010, Patrick's budget proposal calls for raising the current 30 percent excise tax on cigars and smoking tobacco to 110 percent and 120 percent, respectively.
The International Premium Cigar & Pipe Retailers Association respectfully disagrees with this strategy.
"It's outrageous to put the burden of budget management on the backs of cigar smokers. They ought to be finding jobs instead of creating job-killing new taxes," said Chris McCalla, legislative director of the IPCPR.
The association represents some 2,000 members, most of whom are small business owners of mom-and-pop neighborhood cigar stores along with premium cigar manufacturers and distributors of related merchandise. Nearly 40 of those members reside, work and run their businesses in the state of Massachusetts.
McCalla pointed out that studies prove that higher taxes on tobacco products like premium cigars never produce the revenues they were designed to bring in. In fact, he said, they result in lower sales which cost jobs, closed businesses, and significantly reduce the very tax revenues for which they were originally created.
"When tobacco taxes go up, especially those on discretionary products like premium cigars which are enjoyed only occasionally, consumers will find less expensive sources for their favorite cigars. They will turn to the Internet and mail order as well as go across state borders or even resort to buying bootlegged products. That creates a lose-lose situation: neighborhood cigar retailers lose sales and the state loses all that tax revenue," said McCalla.
According to McCalla, tobacco taxes are regressive and disproportionately burden lower- and middle-income earners, even among premium cigar smokers.
"Tobacco taxes also tend to be unreliable and unsustainable sources of revenue and don't result in real budget fixes. They hurt local businesses and the overall economy. The unintended consequences for individual states and the American society as a whole can be avoided with application of sound fiscal policies and real budget reforms instead of bad tax policy," McCalla said.
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