Taxpayer Group Applauds Bloomberg's Spending Restraint While Warning Against Regressive Tax Increase

2/15/2002

From: Eric V. Schlecht or Jerry Terry, 703-683-5700, both of the National Taxpayers Union

ALEXANDRIA, Va., Feb. 15 -- The National Taxpayers Union (NTU), the nation's oldest and largest taxpayer advocacy group, today announced its support for the budget cuts contained in Mayor Bloomberg's budget, but warned against returning to a failed tax policy that hurts the poor, does nothing to decrease smoking, and likely won't increase revenues. The group, with 335,000 members nationwide and over 23,000 members in New York state, specifically opposes the Mayor's proposal to raise the city's cigarette tax by $1.42 a pack.

Stating his group's intention to oppose the tax increase, NTU Director of Congressional Relations Eric V. Schlecht noted that "the arguments regarding cigarette taxes have been rehashed several times in the past few years, thanks in large part to consistent demands for higher and higher taxes on this legal, yet politically incorrect product. Each time the subject is broached, the facts point to the same conclusions -- cigarette taxes are an ineffective deterrent to smoking, inherently unfair, regressive, and a further burden on an already overtaxed citizenry."

Schlecht noted that the claims that tax hikes are needed to offset the costs to society caused by smoking is a ruse. "The Congressional Research Service and Harvard University have shown that tobacco taxes are already so high that they more than pay for the costs that smoking imposes on society."

"Furthermore, the Mayor's quest for more and more revenue at the cost of a politically incorrect segment of the community may actually backfire," Schlecht stated. "The fact is, excessive tobacco taxes can actually reduce revenues."

Schlecht pointed out that in the 1980s Canada began a series of massive tax increases on cigarettes. By 1994, the price of a carton of cigarettes was $46. The sharp increase in taxes triggered an equally alarming increase in smuggling and the black market.

"After the massive tax increase, nearly one-third of the cigarette market in Canada was contraband -- unregulated and untaxed. In 1993 alone, smuggling cost the Canadian federal and provincial governments $2 billion."

"The Mayor should be applauded for continuing Mayor Giuliani's spending restraint, but he apparently still has much to learn from the Big Apple's last Mayor when it comes to tax policy," remarked Schlecht. "Mayor Giuliani kick-started New York City's economy, created new jobs and increased revenues by cutting taxes, not raising them. New Yorkers are overtaxed, not undertaxed and this tax hike proposal should be defeated."

------ Founded in 1969, NTU is a non-profit, non-partisan organization working for lower taxes, less wasteful spending, and taxpayer rights at all levels of government. More information is available upon request or online at http://www.ntu.org/.