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JULY 3, 2009 | Policy Points by COMMONWEALTH FOUNDATION
Budget Facts 2009: Cigarette Taxes
Pennsylvania faces a $3 billion tax revenue shortfall in the state’s General Fund Budget. Competing proposals from Gov. Ed Rendell and the Republican-led Senate differ on raising taxes and reducing/reprioritizing spending. This is the sixth in a series of fact sheets on the state budget.
JUNE 9, 2008 | Commentary by NATHAN BENEFIELD
The Nanny State Mentality
Anyone who has observed politics for long would see that too many politicians believe nothing positive would happen unless they pass a law requiring it. They think that the American people are dependent on them for their wealth, safety, and happiness.
JULY 10, 2007 | Policy Points by COMMONWEALTH FOUNDATION
Smoking Bans
The effort to ban smoking in restaurants, bars, and private businesses is a product of bad science and worse economics.
Recent Blog Posts
FEBRUARY 22, 2010
How Rendell's Cigar Tax Will Hurt Pennsylvania Businesses
For the second year in a row, Gov. Rendell has proposed a tax on cigars and smokeless tobacco, assuming this will have no impact on jobs or the economy. (As I pointed out last year, Rendell's logic seems to be that taxes on businesses only hurt the economy when they are imposed on his friends, like Hollywood filmakers).
The blog "Stogie Guys" points out that online cigar retailers, which have set up shop in Pennsylvania, may choose to move.
A disproportionate number of online cigar wholesalers call Pennsylvania home, including Famous Smoke Shop, Cigars International, and Holt’s. This isn’t a coincidence. Along with Florida, the Keystone State is the only one without a cigar tax. But Pennsylvania Gov. Ed Rendell (pictured) recently proposed a budget that includes new excise taxes on cigars and smokeless tobacco. When a similar tax was proposed last year, Keith Meier, CEO of Cigars International, said his $90 million company with 150 employees might “swim to sunnier shores, such as Florida” if adopted.
posted by NATHAN BENEFIELD | 08:45 AM | 0 comment
SEPTEMBER 15, 2009
Smoking Ban Puts Damper on PA Taverns
A recent article in the Pittsburgh Post-Gazette highlights the burden the statewide smoking ban has on Pennsylvania bars and taverns.
According to the Pennsylvania Tavern Association, there were over 16,000 taverns in the state six years ago, with that number standing currently at 12,500, due in large part to the smoking ban. In accordance with the Clean Indoor Air Act, an establishment can only be exempt from the ban if it's total food sales make up less than 20% of its profit. The only other viable alternative is for the business owners to wall off the restaurant from the bar, a job often costing over $100k. Disastrous economic effects have been seen before in states with similar laws, as we highlighted in a our policy points on smoking bans:
- Four years after a smoking ban was implemented in California, 59.3% of establishments reported a decline in sales averaging over 26%. Nearly 30% of these businesses reported laying off workers or cutting back on hours.
- In New York, the smoking ban costs businesses over $37 million a year, often making these establishments no longer profitable.
Not only are the ill-effects of a government mandated smoking ban well documented in these cases, but evidence illustrating the health effects of second-hand smoke is cloudy as well. In 2007, The New England Journal of Medicine estimated an individual would need to spend 4,000 hours in a smoke filled room to inhale the amount of smoke in one cigarette. Given the devastating effect bans have had business in addition to conflicting science the health risks, it seems The Clear Indoor Air Act is going up in smoke...
posted by MICHAEL NEROZZI | 01:04 PM | 0 comment
APRIL 7, 2009
Federal Cigarette Tax Increase will Reduce PA Tax Collections by $140 Million
A new report from the Tax Foundation looks at the cost of the recent federal tax hike on cigarettes, an increase of 39 cents to $1.01 per pack, state by state. The analysis finds that Pennsylvania smokers will pay $272 million in additional taxes. However, because of a decline in cigarette sales from the higher tax (or rather, a decline in reported, taxed cigarette sales), the state will lose $140 million in revenue.
This at the same time Governor Rendell is proposing a state cigarette tax hike of his own, to help fill the budget gap. Even without a tax rate increase, revenue from the state cigarette tax has been declining - from $856 million in 2003-04 to an estimated $782 million in 2008-09.
This on the heals of a state report that state lottery revenues have been stagnant over the past few years, and counties with a slots casino have seen lottery sales decline - a trend likely to be problematic as additional casinos open. And as mentioned previously, it is still unclear whether the slots revenue will be enough to provide property tax "relief" this year at all.
All in all, it doesn't look like taxing the vices of (mostly poor) Pennsylvanians is paying off.
posted by NATHAN BENEFIELD | 03:25 PM | 0 comment
