FET Talking Points | American Wholesale Marketers Association

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.