Cigarette tax hike causes revenues to drop in DC
You have to wonder if the Georgia General Assembly is paying attention:
In his letter to the mayor and D.C. Council, Chief Financial Officer Natwar M. Gandhi informed them that a $.50 per-pack cigarette tax hike implemented last October has not gone as planned.If the state legislature were to increase the cigarette tax, smokers close to any one of the three states that border Georgia will simply cross the line to settle their fix. This will result in less than expected revenues for the state, though perhaps not as drastic of a dip as Washington, DC has seen, but likely still noticeable.Because the increase, to $2.50, catapulted the District's rate over Maryland's $2-per-pack rate, Gandhi explains, many Maryland smokers who'd bought their tobacco in the District switched back to buying in Maryland. Add that to all the D.C. smokers who started buying cheap-as-dirt Virginia smokes, and you get the picture---instead of $45.4 million in revenue, Gandhi says the District will only bank $30 million.
But the legislative screw-up is more profound than that: The projections are now that this year's estimated cigarette tax revenues will fall below the pre-hike FY2009 levels ($37.6 million)---in other words, the tax hike got the city less revenue, not more.
H/T: Division of Labour
Comments
The state has gotta find some revenue somewhere...cutting jobs and services just isn't going to cut it with voters.
Posted by: Kyle | February 27, 2010 11:33 PM
Legislators have to make some tough choices. They put us in this position by spending too much over the last several years. They're going to have to roll back and streamline government.
Tax hikes aren't going to fly.
Posted by: Jason | February 28, 2010 12:20 AM
The cigarette tax has pretty broad based support based on numbers I've seen (I don't have the polling on hand but it was something like 70% of Repubs, 78% of Democrats supported, I'll have to find it for you) granted that could be a biased line of questioning...but when people hear cigarette tax = medicaid funding it seems to be a generally supported idea. I'm not a big fan of it either for the record...but what other options are available? Would cutting jobs across the board help that much with the medicaid shortfall?
Posted by: Kyle | February 28, 2010 02:37 PM
Lots of things may have "broad based support" but that doesn't make them right.
Posted by: Frank | March 1, 2010 07:53 PM