Increasing the Cigarette Tax: Will the GA Put Our Money Where Their Mouth is?
The extra financial burden of smoking to the health care system and, more specifically, the state has been put forward as one of the justifications for the proposed one dollar increase to the state cigarette tax being contemplated by the General Assembly even as we speak.
It was interesting and a little nauseating to read in today’s ProJo that tobacco is a significant driver of customer traffic for certain stores and that making cigarettes sold in Rhode Island the highest taxed in the country might impact the overall business of those stores.
It also failed to take into account the impact on lawmakers of a hearing-room packed with convenience store owners begging them not to choke off a rich vein of business for them. Their warning: Fewer people will be able to afford cigarettes and those who can will look to the Internet and low-cost states such as New Hampshire for cheaper deals.
The feared result: Rhode Island’s sales will plummet and they’ll lose much-needed business. Manish Modi, who owns a small convenience store in West Warwick, told lawmakers at a recent hearing that he’s barely surviving as it is. “I cannot afford to lose any more business,” he said. “This tax increase is going to drive more and more people to close their stores and drive me almost to bankruptcy.”
Setting that concern aside for a moment and projecting that revenue to the state does increase, in view of one of the asserted reasons for this tax increase, will revenue derived by the state from this tax increase be segregated and directed not into the General Fund but towards the state’s tobacco related health care expenses?