AFP Testimony: Oppose Whopping 120% Tax Hike on Tobacco Products

March 12, 2013


Statement of Opposition to LB 439                                                                             March 12, 2013

Chairman Hadley and members of the Revenue Committee on behalf of the Nebraska chapter of Americans for Prosperity I wish to express our opposition to LB 439, legislation sponsored by Sen. Mike Gloor to increase the tax rate on tobacco and cigarette products.

This bill increases the cigarette tax by 120% and raises taxes on other tobacco products by 55%.  Local occupation taxes, such as Omaha’s occupation tax on tobacco products would be in addition to this massive tax hike.

Increasing the tobacco tax from $.62 to $1.36 a pack is treating smokers as a cash cow for more government revenue and singles out Americans for participating in a legal activity.

In 2012 Nebraskans paid $233 million in state and federal taxes on cigarettes.  The money spent by tobacco users contributes to our local economy and supports local businesses.  Increasing the cost of tobacco products, the most profitable item for convenience store retailers, will have a negative impact on Nebraska’s 2,800 retailers and jeopardize jobs.

Nebraska’s tobacco consumers already contribute significant amounts of tax revenue.  In fact, built into the average cost of $6.30 for a pack of cigarettes are the actual product costs of $2.84 and the tax burden of $3.46.  Roughly 55% of the cost of a pack of cigarettes is taxes.

We do not oppose tobacco taxes; consumers of these products ought to pay consumption taxes like any other consumer.  However, when taxes on a product already exceed the majority of a product’s cost it is wrong for government to seek an additional 120% tax increase.

We respectfully request that you do not advance LB 439.


Brad Stevens                                                                                                                        State Director                                                                                                              Americans for Prosperity-Nebraska                                                                                       (402) 261-9332                                                                              

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