MONTGOMERY, Ala. — Liberal activist group Alabama Arise is calling for a 75-cents-a-pack increase in the state cigarette tax to help fund the Alabama Medicaid Agency.
The Medicaid Agency has requested a $100 million increase in its General Fund appropriation next year. However, the budget passed by the Alabama Senate would keep Medicaid’s General Fund appropriation level at $685 million. The budget is pending in the State House of Representatives.
Lawmakers say there is no way to meet Medicaid’s request, which is more than one-third of the General Fund, without deep cuts to other agencies or increasing taxes on Alabamians for the second year in a row.
Alabama Arise, echoing a recommendation by the Alabama Health Care Improvement Task Force, a panel appointed by Gov. Robert Bentley, says a 75-cent cigarette tax increase would bring in an estimated $200 million to the General Fund the first year. Last year, Gov. Bentley repeatedly pushed for tax increases to solve the state’s budget crisis, including increased tobacco taxes.
After multiple votes during the special sessions last year, the Republican-led legislature passed a 25 cent per pack tax increase on cigarettes after months of debate on how to address a projected shortfall in the state’s ailing General Fund.
Arise claims the money from the new tax hike could be used to provide $180 million to Medicaid, plus $20 million to the Department of Mental Health for substance abuse services, according to Arise. The organization also believes that the increased cigarette tax would cause a decline in smoking that would reduce the revenue.
Last February, Yellowhammer News CEO Cliff Sims detailed why he believes cigarette and other sin taxes do not present a viable long-term solution to budget crises.
“Sin taxes, which are taxes levied on items considered undesirable or harmful, are a favorite tool of liberal politicians looking for a palatable way to prop up big government,” Sims said. “They get the revenue they want while avoiding a tax hike on income, property or other areas that could elicit an immediate negative response from the majority of the voting public.”
“Outside of the obvious fairness issue, those who think a hike on cigarette taxes could be a long-term cure for Alabama’s budget woes should also consider the precipitous decline in cigarette sales over the years,” he continued. “As a result of the tax hikes, laws banning smoking, aggressive anti-smoking ad campaigns and polling that indicates Americans no longer consider smoking ‘normal behavior,’ the U.S. Surgeon General published a 980-page report last year actually predicting an eventual end to smoking in the United States.”
Multiple studies show that as the price of cigarettes, tobacco products, and tobacco replacements increased, sales have decreased—and revenue will decrease right along with it.
“The bottom line is that sin taxes are nothing more than a way for liberal politicians to prop up big government rather than implement real reforms,” Sims concluded.
