Smokers and drinkers would pay higher
The Assembly Taxation Committee held a hearing Tuesday on AB 333, which calls for an increase on all alcohol and tobacco products.
Democratic Assemblywoman Peggy Pierce of Las Vegas said the goal of AB333 is to raise needed revenue. But critics told members of the Assembly Taxation Committee just the opposite would happen because people would cut back on their habits.
"Proposed increase in sin taxes really isn't that dramatic", Peggy Pierce said.
"We're talking about six cents on a bottle of wine", said Pierce. No one would even notice that or even a 45 cent hike on high end liquor. The state hasn't raised taxes on tobacco since 2003. Pierce said the state is looking to raise revenue and this is a great place to start. "We would generate $118 million annually."
However, some say this bill would actually do the opposite of what's intended.
"We believe customers will seek alternative sources of supply to buy their alcohol and tobacco and not use traditional retailers," said Peter Kruger, a spokesman for the Cigar Association of America.
One of those alternative sources is the Internet.
"Click on the Internet and you'll see people offering tobacco products," said Kruger. "It's significant. It's huge and as the tax rate increases, consumers choose that source of supply."
That's one source the state has no way of tracking and taxing.. Pierce said history shows her bill will not backfire.
"In terms of dollar value, the taxes went up after we raised them in 2003 and I anticipate that will happen again," said Pierce. There is more to this bill than raising money. Health is an issue being raised, too.
"We know in research, for every 10% increase in tobacco products, you see a 4% decrease in usage," said Jennifer Hadayia of the Washoe County School District.
The bill would raise the per-pack cigarette tax from 80 cents to $1.70. The proposed hike in alcohol taxes varies by alcohol percentage content, but the levy on hard liquor would jump from $3.60 to $4.50 a gallon.
Those against the bill said a hike in tobacco and alcohol taxes would hurt gaming and convenience stores at a time they are already struggling.
Another tax bill, SB386, was considered by the Senate Revenue Committee. That measure would raise the cigarette tax to $2 per pack.
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