Hike in cigarette tax threatens Maryland retailers

July 16, 2013

President Obama's fiscal year 2014 budget includes an early childhood learning initiative that would be funded by a 94-cent per pack increase in the federal excise tax on cigarettes. The federal government will cover 91 percent of the costs in year one, but by year 10 of the program the states' funding obligations would rise to 75 percent.

In 2009, when the federal government raised the cigarette excise tax, total tax paid sales of cigarettes dropped by more than 8 percent. The proposed cigarette tax hike, which is a 93 percent increase, could diminish tax-paid sales even further.

According to the National Association of Convenience Stores, cigarette sales to adult consumers account for almost 40 percent of all in-store convenience store sales nationwide. Increasing taxes on cigarettes could jeopardize retailers' ability to grow and remain profitable, reducing Maryland's estimated tax revenues.

Maryland's economy remains fragile, and another substantial tax increase will hurt consumers and businesses. Adding almost a dollar to the current federal excise tax on cigarettes will put an additional burden on retailers, making it more difficult for them to compete with neighboring states and black market sellers.

Hard-working Marylanders cannot afford another large tax increase. The president's education initiative is a great idea — funding it with unpredictable taxes is not.

Patrick Donoho, Annapolis

The writer is president of the Maryland Retailers Association.

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