States eye ‘sin’ taxation as salvation for budgets

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And the idea of taxing sodas has gained traction in state legislatures and city halls. Philadelphia Mayor Michael Nutter in particular has loudly — though, thus far, unsuccessfully — championed a new tax on soft drinks in the city.

Washington and Baltimore both raised taxes on sodas last year, though Baltimore may end up paying a political and economic price: PepsiCo Inc. announced last week it is closing part of its Baltimore Hampden plant, eliminating more than 70 jobs. Company officials said the beverage tax played a role in the decision, although Pepsi had already been looking to cut local costs.

One day after the announcement, Maryland Senate President Thomas V. Mike Miller Jr. said a drive in Annapolis to raise $200 million through new taxes on alcohol in the state was “insanity personified.”

Mr. Miller, Calvert Democrat, said he could support a modest increase in taxes on beer and wine, but he said some of the proposals making the rounds go too far.

Versions of that debate are going on across the country: How much of a tax increase is too much?

Cigarettes and tobacco, especially, are being targeted, even in historically tobacco-friendly states in the South.

In Georgia, where lawmakers are looking to close a budget gap of almost $2 billion, a legislative advisory committee this month proposed almost doubling the excise tax on a pack of cigarettes.

South Carolina, which once boasted the country’s lowest cigarette taxes — 7 cents a pack — overrode a veto from Gov. Mark Sanford last summer to bump that rate by half a dollar, to 57 cents a pack.

That increase left Missouri with the nation’s lowest rate, 17 cents a pack — a distinction that rankles state lawmakers like Rep. Mary Still, Columbia Democrat.

“If this is a race to the bottom, we win,” she wrote in a recent editorial calling for a dollar-a-pack tax increase.

New York, which already had the highest cigarette taxes in the country, approved an increase of $1.60 in June, bringing the state’s levy to $4.35 a pack. With the state and local taxes, New York City smokers pay almost $11 for a pack to satisfy their nicotine fix.

The increase helped the state close a $9 billion budget gap, but the state faces an even larger shortfall this year. New Democratic Gov. Andrew M. Cuomo weighed in Thursday on the cigarette tax, warning the state’s Indian tribes, which have challenged the state’s authority to collect the new taxes on reservations, that they will not be spared.

That, warned one Western New York Indian leader said, would amount to “an act of war.”

Other opponents don’t go quite so far, but critics like Mr. Wilson contend that Americans are in danger of losing important freedoms in the rush to raise cash and punish “bad behavior.”

“Having a soda or enjoying a candy bar, most Americans don’t see these as ‘sins.’ They see these as simple pleasures,” the analyst said. Calling the taxes “regressive,” he added: “The practical effect is we just make the lives of people - people who aren’t so well off in the first place - just a little less enjoyable.”

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