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FET Talking Points
- Higher cigarette taxes disproportionately burden the poor.
- Tobacco taxes are inherently regressive because smokers tend to be low- and moderate-income.
- Between the current federal tax, state and local taxes, and tobacco settlement payments, the government secured almost $33 billion in 2006 alone from smokers. Given that only about 20% of the adult population smokes, that’s a lot of revenue generated.
- Taxes from cigarettes are not a reliable, stable source of revenue.
- Cigarette sales are declining by approximately 1 to 2 percent per year. The FET is not a stable source of revenue.
- A huge excise tax will only accelerate the decline of tax revenue from cigarette sales. When tobacco revenue becomes insufficient to fund the federal health program – State Children’s Health Insurance Program – then the government will have to add to the deficit or increase taxes on a broader base of taxpayers.
- Higher cigarette taxes will lead to an increase in crime.
- It is well-known that gangs, terrorists and organized crime find illegally obtained tobacco as profitable as drugs.
- Currently, for every 1,000 cartons of cigarettes smuggled into the country, the federal government loses $3,900 and the states lose an average of $7,850.
- A higher FET will NOT help prevent youth from smoking.
- When taxes are raised, smuggling and theft make cigarettes more accessible to under-age smokers.
- Efforts to keep children from smoking should be done through peer influence, parental guidance and accessibility.
- It’s estimated that nearly 12,000 tobacco industry jobs could be displaced due to the 61 cent FET hike. This includes about 1,900 tobacco grower jobs and 1,020 manufacturing jobs.
- Nearly 5,500 tobacco retailing and wholesale jobs could be displaced and another 3,900 jobs could be lost in the industry sectors that directly supply the core tobacco industry.
- Nearly 63% of all tobacco sales occur in the nation’s 140,655 convenience stores according to NACS.
- The average c-store sells about $372,555 worth of cigarettes each year. In addition, cigarette sales are the number one in-store item for c-stores, compromising about 34 percent of merchandise sales.
- A 61 cent FET hike will reduce cigarette sales by an estimated one billion packs in 2008 – a 5.8% reduction.
- Cigarette excise taxes have become a major source of revenue for state government. With an FET increase, state revenues will decline.
- State governments could lose an estimated $1 billion in net tax and MSA revenues per year due to a 61-cent per pack federal tax hike.
- As cigarette values rise, the safety of employees is jeopardized. Tax increases make cigarettes a bigger target of thieves because they can be easily transportable and can easily be resold.
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