Louisiana legislators failed yesterday to override Governor Bobby Jindal’s (R) veto of a bill that would have made permanent a temporary 4 cent portion of the state’s 36 cents taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. on cigarettes. In his veto message, Jindal stated that he “made a commitment to the taxpayers of Louisiana to oppose all attempts to raise taxes.”
We said this earlier this year on a cigarette tax increase in Connecticut:
Cigarette tax rates have been increasing steadily over the years but they often yield less revenue than initially expected, partly because they fuel rising rates of smuggling and organized crime in states with high tax rates.
Increasing excise taxes on specific goods such as tobacco and alcohol is defensible only to the extent that consumption of these goods imposes costs on society (through higher health care costs or polluted air, for example). But rarely do policymakers justify tax increases in such a matter; in reality, excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. increases are used largely as a convenient source of revenue. Targeting politically unpopular minorities to balance the state budget increases volatility and raises equity concerns. If more revenue is needed to fund general government services, the burden of those taxes should be shared by all.
More on cigarette taxes here.
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