Written by Puff Staff

Monday, 04 April 2011

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Proposal to increase tobacco tax in Nebraska could backfire


Nebraska is just another example of a state that could be hit hard with an increased tobacco tax. The latest anti-smoking proposal comes in the form of Legislative Bill (LB) 436, and it aims to increase taxes on cigars and other tobacco products from 20 percent to 65 percent of the wholesale price. This whopping 225 percent increase is being pushed by proponents of the bill who say that it will help act as a deterrent from smoking . In addition to the so-called health concerns, supporters of LB 436 predict that it will generate sufficient revenue to prevent the state's budget cuts in the areas of education and health care.

While health concerns and revenue generation are often used as a platform to push such tax increases and other anti-smoking movements, the intended effects often fail to appear. The International Premium Cigar & Pipe Retailers Association (IPCPR) has recently conveyed concerns about the potential negative impact that the 225 percent tax increase could have on local businesses in the state. The IPCPR is a not-for-profit trade association that represents and assists premium retail tobacconists and their suppliers. LB 436 is certainly not the first anti-tobacco issue that the IPCPR has tackled, and it's doubtful it will be the last.

Christ McCalla, IPCPR's legislative director, stated that such dramatic tax increases as proposed in LB 436 have a tendency to almost always backfire. First, they damage local businesses. In the case of cigars and other tobacco products, customers will purchase less, look to purchase out of state, or buy their products online. Even worse, such high taxes can promote the introduction of contraband product crossing into state lines. This gives smokers a supply of their product and results in zero tax revenue for the state. As the local businesses fail, they must cut jobs in order to survive. In the end, the state loses, and so do the locals.

Of course, supporters of LB 436 have done their best to present it in a positive light. At the beginning of this year, the Robert Wood Johnson Foundation paid for a poll that surveyed 500 Nebraskans on their opinions of the tax increase. The majority voted in favor of LB 436, and proponents of the bill used the poll's results as a springboard. Chris McCalla labeled the poll as phony, mostly due to the fact that the Robert Wood Johnson Foundation produces the leading brand of anti-smoking medication. The foundation wants people to stop smoking so that they can sell more of their product to aid in the process. Beyond that, McCalla also noted that such a small poll should not have a hand in influencing tobacco legislation.

McCalla definitely makes some valid points, and the likelihood of LB 436 hurting Nebraska's tobacco-related businesses is high. We already have recent examples in New York and Utah of local tobacco shops that have been devastated, so why would Nebraska be any different?

If you are a Nebraska resident and want to join in the fight against LB 436, the IPCPR urges you to contact your state legislators and voice your displeasure.


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