April 11, 2013

Nebraska State Legislature
Capitol Building
1445 K Street
Lincoln, Nebraska 68509

Dear Senator: 

On behalf of the 4,724 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in the state of Nebraska, I urge you to reject any efforts to revive the tax increases proposed in LB 439.  Raising taxes will only cement current wasteful government spending practices, discourage lawmakers from cutting excess expenditures, and hinder state agencies from undergoing critical review and reforms. 

LB 439 proposed more than doubling the state’s taxes on cigarettes, from $0.64 to $1.36 per pack.  It would also increase the tax on other tobacco products from 20 percent to 30 percent of the wholesale price.  Although the bill was voted down by the Nebraska Legislature’s Revenue Committee, the bill’s sponsor has said that he is intent on advancing the measure this year.  

History has shown that raising excises taxes does not produce projected revenue, as such tax increases drive purchases to untaxed or lower-tax venues, like Native American territories and the Internet.  Of the 57 excise tax increases that states implemented between 2003 and 2007, only 16 met or exceeded revenue targets.  This recurring discrepancy in revenue projections and actual revenue is evidenced by the difference in scoring by Nebraska’s Legislative Fiscal Office and Nebraska’s Department of Revenue, which varied by 22 percent.  Furthermore, the Congressional Budget Office has reported that cigarette excise taxes are the most regressive type of excise tax and disproportionately impact the poor and those living on fixed incomes.  

I ask you to vote for spending cuts without tax increases and to consider the devastating economic effects tax hikes would have on your state’s businesses and residents, especially at this time when so many are facing financial hardship.  

CCAGW urges all members of the Nebraska State Legislature to oppose any proposal that seeks to raise taxes.  Lawmakers should be focused on addressing the state’s budget shortfall by cutting taxes and wasteful spending instead of forcing constituents to hand over more of their income.  It is time to give hard-working Nebraskans a break.  

Sincerely,

Tom Schatz
President, CCAGW