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Kansas is the latest state set on wringing more money out of the already overburdened smoker population as lawmakers consider a plan to raise excise taxes on cigarettes by $.75 putting the cost per pack well over $5, at this rate the government gets more money per pack than the manufacturers! The lawmakers pushing the plan say that this extra tax revenue will go toward funding Medicaid, because they want to free up general funds to cover other budget gaps.
Kansas isn’t alone when it comes to budget problems. Many, many states are facing drastic shortfalls in the coming months – but raising cigarette taxes isn’t the answer. Cigarette tax hikes are a historically unreliable source of revenue, not a golden goose for legislators. The funds simply won’t be there. Other states, like New Jersey, had a far less dramatic tax hike two years ago, only 17.5 cents, but they actually ended up losing $46 million in tax revenue. The Kansas proposal is more than 4 times that and could end up losing even more.
That’s because as soon as cigarette taxes go through the roof smokers head across state lines for cheaper packs, or buy their cigarettes online or on the black market. This harms small local businesses a great deal. Convenience stores get approximately 34% of their in-store income from cigarette sales, and those profits will soon plummet, further draining the Kansas economy.
Kansas legislators can’t expect one, small portion of the population to bear the brunt of budget problems. It’s clear that, like other states in the same boat, Kansas has a spending problem, not a revenue problem. Real growth comes from rolling back government regulations and cutting taxes, not imposing more costs. During these uncertain economic times, the last thing Kansas needs is another tax.
Take Action and tell your elected officials Kansas needs to live within its means and not reach into smokers’ pockets for a quick fix.