Fired up over idea to raise sin taxes

LAWRENCEBURG, Ky. (AP) — Faced with huge budget holes, states from Connecticut to Arkansas are eyeing higher taxes on cigarettes and booze, infuriating consumers who say the goods are the last vices they’ve got to help cope with lost jobs, a deepening recession and overall economic misery.

In Pittsburgh, protesters dumped beer and liquor into a river after county officials approved a 10 percent tax on poured drinks. Patrons in Oregon bars downed brews while writing lawmakers to oppose a proposed beer tax increase. And in Kentucky, protesters poured bourbon on the Capitol’s front steps to demonstrate their opposition to a 6 percent sales tax on all booze.

“The way things are going right now with the economy, the first thing people want to do is go get a bottle or a beer, and soak their sorrows,” said Jack Weaver of Louisville, who gathered with other Teamsters in a union hall last month to rail against Kentucky lawmakers who voted to raise the taxes as of April 1.

Sin tax increases to help balance budgets are nothing new, but the economic meltdown has legislators proposing them even in states such as Kentucky, where alcohol and cigarettes have long been sacred cows. After all, it is famous for its bourbon whiskey and is a leading producer of tobacco used in cigarettes.

“Sin taxes have quickly emerged — as they did in the last recession — as one of the popular tactics that states have adopted to bring in the extra revenue in an environment where raising most other taxes are still pretty politically radioactive,” said Sujit Canagaretna, a senior fiscal analyst for the Council of State Governments.

Faced with an unprecedented $456 million revenue shortfall, Kentucky ignored protests and raised the taxes.

Arkansas increased its cigarette tax this month, and other states considering it include Connecticut, Florida, Michigan, Mississippi, North Carolina and Oregon. Other states — including California, New York and Hawaii — are also considering raising taxes on alcohol products.

The federal government has already increased the cigarette tax by 62 cents a pack to $1.01, and Kentucky doubled its state tax to 60 cents a pack. Together, the taxes will push average prices for name-brand cigarettes to as much as $44 a carton, a $10 increase.

“It’s a little extreme,” said Scott Harper, 63, a former helicopter mechanic now living on Social Security and Veterans Administration benefits. “I’m going to quit. I’ll have to.”

Harper was trying to buy a carton of Swisher Sweets at Bo’s Smoke Shop last week, but he had to settle for a pack because smokers have been flooding state tobacco stores to stock up before the tax increases.

Some smokers and drinkers are angry, and public health groups see it as an opportunity to persuade people to give up their bad habits.

Opponents in the Legislature and the alcohol and tobacco industries say they’re afraid the tax increases could cause huge drops in sales, costing jobs and disappointing lawmakers with lofty revenue expectations.

“Ultimately, we all have limited budgets,” said David Ozgo, chief economist for the Distilled Spirits Council of the United States. “And if government is taking a greater share, that reduces what you can spend on yourself.”