Sunday, March 25, 2007

Tobacco Tax Hike is uncertain at best

Two Newspaper Reports:

Kingsport Times-News

State Reps. Nathan Vaughn and David Hawk aired their concerns about the cigarette tax hike during a taping of "Legislative Chat," a public affairs talk show produced for public television by East Tennessee State University.

"There are many constituencies that really have a problem (with the tax hike) - I think farmers, retailers and individual consumers who believe that 40 cents is a very significant tax," said Vaughn, D-Kingsport. "The issue, though, really is are we going to be able to do what is necessary to maintain quality education in the state of Tennessee? And without that 40 cent tax or something extremely significant, I believe we will have some real struggles in trying to maintain quality education in this state, and hence, I think we will have some real budget woes as a result of trying to move forward."

Hawk, R-Greeneville, reiterated a GOP concern that the cigarette tax increase produces unstable revenue.

"You're going to be taxing a product you're trying to discourage," Hawk said. "It's going to create a declining source of revenue that may not fulfill the obligations three, four, five years down the road. We do need to fund our at-risk students more so. We do need to fund our growth that we're seeing across the state. This particular tax ... there is no guarantee that it is going to bring in several million dollars. As you increase taxes on products and as we try to discourage smoking across the state of Tennessee, more likely than not it will start a decline in the uses of tobacco which will start a decline in the tax revenue."

Commercial Appeal

"Until we find out exactly what the surplus is, I can't know whether I'm going to vote for or against an increase," he said.

But if enough surplus exists, he said, "Why should we need to raise taxes?"