Rhode Island Taxpayers: Stop Excessive State Tax Hike!

Rhode Island's business tax climate is currently among the worst in the country, and a punitive cigarette tax rate is one component of this poor economic competitiveness. Smokers who purchase their cigarettes in-state see a large portion of their income gobbled up by the government. They then have an incentive to cross the border into Connecticut to buy their cigarettes. If this tax hike passes, Massachusetts will be another destination for cost-conscious smokers.

Smokers tend to have lower incomes, making the cigarette tax highly regressive. In the current economic climate, Rhode Island's poor shouldn't have more of their hard-earned money taken by big spenders in the State Capitol.

Cigarette taxes also have direct impacts on non-smokers. Because they are designed to discourage smoking, the number of people paying the tax declines at a faster rate when the tax increases. Once that revenue begins to disappear, the state has to look for another tax to hike in order to make up for the dwindling income. Essentially a cigarette tax increase now is a virtual guarantee to increase a different tax in the future.

Politicians across the country are using current economic conditions to justify tax increases, and officials in Providence are no different. However, it is not lack of tax revenue that has caused Rhode Island's deficit. The perpetual growth of government is to blame. Whether you smoke or not, help NTU convince the Legislature that this tax-hiking plan is precisely the opposite of what Rhode Island needs in these tough times!

Sample Letter for Campaign

Subject: Raising cigarette taxes hurts all Rhode Islanders

Dear [ Decision Maker ] ,

I urge you to vote against the proposed $1-per-pack increase in the cigarette tax.

Smokers are easy targets for politicians, but boosting taxes on them will hurt all Rhode Islanders. Fewer people from out of state will buy cigarettes here, while our own consumers may cross the border for cheaper smokes. Given the struggling economy, a tax hike is the last thing our state needs. This regressive tax will hit the poor hardest, and in the long run the revenues will dry up as smoking rates and in-state cigarette sales decline. That means we'll soon be facing future increases in other taxes.

Rhode Island's elected officials should cut spending to balance the budget. Please reject this punitive tax hike on behalf of all your constituents.

Sincerely,

Campaign Launched:
February 11, 2009

Background Information

Shortsighted politicians in Providence seem to believe that tax increases are the solution to the projected $357 million budget deficit. They fail to see that hiking the cigarette tax to $3.46 per pack, the highest level the nation has ever seen, will have a negative impact.

We've seen the effect of a cigarette tax on state revenues before. In numerous states, an increase in the excise tax has caused residents to jump the border to purchase cigarettes elsewhere. It has also caused residents of other states to stay at home to buy their smokes when rates there are tolerable. If we allow Rhode Island to raise its tax yet again, not only will more cross-border shoppers avoid the state, but Rhode Islanders themselves will begin making purchases in states with lower rates.

Furthermore, an increase in the cigarette tax constitutes a regressive levy on the poor. One study found that money spent on cigarettes made up 3.2 percent of income of people in the bottom fourth of the income distribution, as opposed to only 0.4 percent of those in the top fourth. Low-income Rhode Islanders have plenty to worry about in the midst of the current economic downturn. Instead of lessening their burden, the government proposes to take more of their precious dollars.

Rhode Islanders who don't smoke should be equally alarmed. Revenue from a tobacco tax hike is not sustainable, as it causes a decline in smoking. Thus, to keep a constant revenue stream, the state will be forced to hike other taxes down the road. Even if you don't see an immediate personal impact from the tax increase, you can expect to pay more in excise, property, sales, or income taxes in the future.

This is all the more true since enactment last week of a federal cigarette tax increase, which is being tapped to expand a health care entitlement program. Experts with the Heritage Foundation estimated that more than 20 million more people would have to start smoking just to fund the new expansion -- an unlikely proposition. Thus, the state will be fighting with Washington over a dwindling pot of revenue.

Massachusetts, which sports a $2.51-per-pack cigarette tax, is undoubtedly rooting to see the Rhode Island tax hike passed into law, as is Connecticut. Don't be misled -- any tax hike will have a terrible effect on Rhode Island's well-being. Tell your legislators today -- no cigarette tax hikes under any circumstances!