House budget panel to vote on proposed cigarette tax increase

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Alabama business leaders and advocates testified Tuesday before the House’s General Fund budget committee about the economic and health consequences of increasing the cost of tobacco products purchased in the state.

The public hearing was to consider Rep. Patricia Todd’s House Bill 572, a proposal to increase the state tax on tobacco products by 25 cents.

Advocates supporting higher cigarette taxes warned the panel that the bill didn’t go far enough to bring substantive health and economic benefits.

Kimble Forrester, executive director of Alabama ARISE, said that an increase of at least 55 cents per pack is necessary for the state to see a decrease in health costs, as well.

“The studies I’ve seen say that you have to raise taxes enough by at least 10 percent per pack to give people some sticker shock,” he said.

Others spoke against a higher tax, warning that the increase would send consumers across state lines to purchase tobacco at lower costs per pack. A retailer from Andalusia said that dozens of his customers come from neighboring Florida “because it’s $10 a carton cheaper.”

House Bill 572 is the smallest of three proposed cigarette tax increases lawmakers have considered.  Originally, Todd had proposed a tax increase of 32.5 cents. And as part of his budget plan, Gov. Robert Bentley had proposed an 82.5-cent tax increase on cigarettes.

Todd’s proposal was one of several before the committee today as lawmakers try to agree on a path to overcome an estimated $541 million shortfall in the state budget. The committee also heard comment on legislation to increase taxes on car sales and car rentals, along with two proposals to cut state employee pay through furloughs or by cancelling annual bonuses.

The committee chairman indicated that the panel will reconvene on Wednesday for a formal vote.

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