House approves 'sin' taxes
Proposed Washington State Tobacco Tax Increase Causes Committees to Clash January 15, 2010 Two Washington state legislative committees were at odds with each other at yesterday’s joint hearing regarding HB2493 aimed at increasing taxes on tobacco products. The joint hearing was comprised of the House Health Care and Wellness Committee headed by Rep. Eileen Cody of Seattle and the House Finance Committee chaired by Rep. Ross Hunter of Medina. Hunter is seeking ways to offset an anticipated $2.6 billion state budget shortfall while Cody’s stated goal is to “force people to quit smoking.” “Those objectives are counter-productive when it comes to increasing taxes on tobacco products – neither happens,” said Joe Arundel, owner of Rain City Cigar Store in Seattle, who testified at yesterday’s meeting. “In fact, increased tobacco taxes cause many smokers to find ways around the higher taxes by engaging in illegal activities such as buying bootlegged products or by making their tobacco purchases in neighboring states where taxes are lower, or by purchasing tobacco products by mail-order or over the Internet. The result is the same: no tax revenues for the state of Washington and a loss of jobs and businesses within the state,” Arundel said. Arundel is a member of the Board of Directors of the International Premium Cigar & Pipe Retailers Association. The IPCPR is a non-profit organization comprised of some 2,000 primarily small, mom-and-pop businesses that retail, manufacture or distribute premium cigars, pipes, tobacco and related accoutrements. “People who have never enjoyed premium, hand-made cigars or pipes find it difficult to understand how different they are from cigarettes. Premium cigars and pipes make ordinary moments special and special moments extraordinary. They are indulged in relatively infrequently and are enjoyed for their social value as well as for their taste. That’s the way it’s been for centuries,” said Arundel. Representing the Cigar Association of Washington was Dale Taylor who reminded the committees that tax reductions and reasonable tax caps on premium cigars and other tobacco products actually generate revenue increases for state treasuries whereas increased taxes cause those revenues to decline precipitously. Chris McCalla, legislative director of the IPCPR, summarized what he called the principal reasons tobacco taxes should not be raised. “They are regressive and disproportionately burdensome on lower- and middle-income people. They are an unreliable and unsustainable source of revenue. They are a discriminatory tax on a minority of the population. They hurt local businesses and the overall economy, and they encourage cross-border, black market, and Internet purchases,” McCalla said. “And everyone knows that human nature cannot be legislatively controlled,” he added. ### Contact: Tony Tortorici 678/493-0313 tony@tortoricipr.com
State Will Challenge "Sin Tax" Ruling March 31, 2006 OLYMPIA -- The state says it will appeal a Snohomish County judge's ruling that struck down "sin tax" increases that lawmakers passed last year.Attorney General Rob McKenna, backed by Governor Chris Gregoire, announced the decision to appeal Friday.Last month, Superior Court Judge James Allendoerfer overturned a tax plan that Democratic lawmakers used last year to balance the two-year state budget. It included about 260 million dollars worth of taxes, including liquor and cigarette tax increases.The judge agreed with critics that lawmakers illegally bypassed spending limits that voters set in Initiative 601 to enact the new taxes.The critics had argued that the Legislature artificially inflated the state's spending limit by moving 250 million dollars between various state accounts.The tax package included a 60-cents-per-pack increase in cigarette taxes, an increase of 1-dollar-33-cents on a liter of hard liquor, and a sales tax on extended warranties on consumer ReadMore
Price hike doesn't deter smokers
Jan 30, 2006
Courtney Sherwood
When legislators hiked cigarette taxes by 60 cents a pack to help balance the state budget last year, they figured the higher cost of a smoke also would drive people to quit.
So far, they're wrong.
State figures show that more cigarettes were purchased in Washington after the tax increase than before, even as local cigarette prices gradually have risen more than the amount of the tax increase.
Rising cigarette sales are a trend that has mystified state experts, who won't know more until smoking survey results come out in October.
"It's pretty surprising," said Mike Gowrylow, spokesman for the state Department of Revenue. "We expected taxable consumption to drop."
Instead, cigarette sales rose 2.5 percent -- from 115.8 million packs in July through December 2004 to 118.7 million packs during the same period of 2005, the first six months that the tax was in effect.
It's possible that the increase can be attributed to new agreements with tribal tobacco sellers who are now working with the state. "We need more data before we can draw any firm conclusions," he said. State budget analysts had expected the tax to reduce cigarette sales, but they may have underestimated the grip that nicotine has on smokers like Patti Robbins, 47, of Longview.
The cost of smoking
Average price of a pack of Marlboro Reds in Longview
June 21: $4.29
Jan. 26: $5.06
Difference: 77 cents
Prices on Jan. 26
Bridgeview Tobacco in Rainier: $4.15
Av. Longview price: $5.06
Lowest Longview price: $4.65
"I just take it when they raise the price," Robbins said. "New taxes bother me, but what can I do about it? I didn't notice a big change ... and my habits haven't changed."
Aa Daily News survey of local cigarette prices suggests they've risen by more than 70 cents in the past seven months.
RJ Reynolds and Phillip Morris officials said they did not change cigarette prices in reaction to the new sales tax, and it's unclear where the extra charge is being added.
Tobacco companies sell their cigarettes to state licensed wholesalers, who then sell to local stores.
Perhaps sales remain strong because people have gotten used to paying higher prices for other goods, said Washington Department of Health spokesman Tim Church.
"When gas went over $2 a gallon, I was trying not to drive as much," he said. "But after a while I got used to it being over $2 a gallon, and I was driving as much as I ever did."
Still, higher prices do tend to drive smoking rates down over time, Church said, especially when combined with other restrictive laws and anti-smoking counseling. "Over the past five years, adult smoking rates have been dropping across the state," Church said.
Figures showing whether that trend continued in the last half of 2005 won't be available until the second half of this year, he said.
Larry Larson, owner of the Bridgeview Cigar and Tobacco Shop in Rainier, said he was at a loss to explain the rise in cigarette sales in Washington. Sales in his store also have increased, he said.
"Maybe there are just more people smoking."
"The tax definitely helped us" by driving some smokers into Oregon to save on taxes, Larson said. He was unable to cite specific sales statistics linked to new Washington tax.
Longview resident Kim Gillespie, 49, said she started cutting back on cigarettes two years ago -- but it's personal motivation, not government taxes, that helped her out.
"It takes me all day to smoke two cigarettes a day now," said Gillespie, a former pack-a-day smoker.
Her decision to cut back won't be reflected in 2005 statistics, because her habits have been steady for the past year, Gillespie said.
"My grandma died of lung cancer, and I wanted to get healthy," she said. "But I don't think the new tax made a difference for me."
House approves 'sin' taxes
April 22, 2005
SEATTLE POST-INTELLIGENCER STAFF AND NEWS SERVICES
The state House narrowly approved a package of "sin" taxes late last night, including increases in cigarette and liquor taxes.
"This a limited, targeted set of consumer taxes to fund reductions in (school) class sizes and higher education enrollments," said Rep. Jim McIntire, D-Seattle, the bill's sponsor.
The House voted 50-48, the minimum required for passage, to increase the tax on cigarettes by 60 cents a pack and the tax on hard liquor by $1.33 per liter.
Holy smokes! Lawmaker proposes increasing state tax to $2.50 a pack
2/18/2005
By DAVID AMMONS
The Associated Press
OLYMPIA, Wash. (AP) - A Republican lawmaker wants to increase the state cigarette tax to $2.50 a pack.
The proposal would deter thousands of young people from taking up the smoking habit and raise an additional $300 million per biennium for health care, Rep. Rodney Tom of Medina said Friday.
His plan, which will be scheduled for a hearing by the House Finance Committee, would boost the cigarette tax by more than a dollar from the current $1.425 per pack. The latter rate was set by the voters in 2001, when the rate was boosted 60 cents a pack to expand the state's subsidized health coverage for the working poor.
The new rate would put the state tax at $25 a carton, the highest rate in the nation.
A pack of Marlboros was selling for $4.89 at the Tumwater Safeway on Friday, or nearly $50 a carton.
Tom hopes that jacking up the tax will significantly reduce smoking, especially among youth, and that the state will be able to hold down tobacco-related health care costs. He said experts calculate that each pack of cigarettes generates $12.70 in health costs.
"It's time to stop subsidizing the effects of cigarettes so we can direct more resources for priorities like education," he said. "If we can significantly reduce the numbers of smokers through this measure, especially youth, it will be good for everyone."
He estimates that his plan would stop 61,000 youth from taking up the habit and prompt 37,000 adults to stop.
"It's a double win - we bring in $300 million in new revenue and save over $1 billion in future health care costs," he said in an interview Friday.
Tobacco use has a devastating impact on citizens and the state budget, he said.
"If we want to get a handle on our health care costs, we need to focus on prevention and look at things like smoking and obesity."
Tom said the tax plan is a fair way to recoup some of the costs government has to pay for tobacco-related illness. He would earmark 83 percent of the new revenue to the state's Health Services Account and the rest to the Youth Tobacco Prevention Account.
He conceded that some of his fellow Republicans have given him flak for sponsoring the bill. But he said his 48th District constituents, even many of the smokers, are encouraging him to pursue his plan.
Rep. Dawn Morrell, D-Puyallup, an intensive care and coronary care nurse at Good Samaritan Hospital in Puyallup, said she's intrigued by the idea of a mega-increase in the tax. She said she can usually spot a patient who has smoked.
"Being on a ventilator (with end-stage disease) is incredibly expensive and is a human tragedy," she said.
But she said smokers will be furious if lawmakers approve an increase like Tom has in mind.
House Finance Chairman Jim McIntire, D-Seattle, didn't take a position on the bill, but said he's glad Tom has proposed it.
"It will provoke the kind of discussion we should have about tobacco," he said. "What would this do to hasten the demise of consumption of tobacco and what would it mean to our ability to finance health care on a base that is shrinking?"
As tobacco taxes rise, consumption softens and more people get their smokes online or buy them in other states, said Department of Revenue spokesman Mike Gowrylow.
The 60-cent hike in 2001, mandated by voter-approved Initiative 773, was supposed to go to expansion of the Basic Health Plan. Lawmakers later grabbed the money to pay for the current enrollment in the plan, not for increased slots.
The American Lung Association of Washington embraced Tom's bill on Friday.
"We are supportive of the bill because it would address smoking by youths," said spokesman Paul Payton. "The average age of first-time tobacco users is 12. Cost is definitely a big contributor to whether they make the decision to start smoking."
He said a study conducted for the Campaign for Tobacco-Free Kids showed that for every 10 percent increase in price, youth smoking declines by 7 percent and overall cigarette use drops by 3 percent to 5 percent.
Payton said 11 states boosted their tax last year, with Michigan going to $2, New Jersey to $2.40 and Rhode Island to $2.46.
Jamie Drogin of Philip Morris USA said the proposed Washington increase is excessive, unfair and bad fiscal policy.
"What we have seen from many other states is a decrease in legitimate sales and a subsequent increase in contraband sales," she said in an interview. "This will have a negative impact on Washington retailers, and on the state. They will not collect the revenue they expect."
The tobacco industry is declining and its poor fiscal policy to use tobacco taxes to pay for a rapidly increasing state cost like health care, she said.
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