State Legislature of Montana

House of Representatives

Taxation Committee

1301 East 6th Avenue

Helena, Montana 59601

Dear Representative,

On behalf of the 9,316 members and supporters of the Council for Citizens Against Government Waste in the state of Montana, I urge you to oppose SB 354, regarding the increased taxation and regulation of tobacco, nicotine, and tobacco products.

SB 354 would exacerbate a regressive tax policy that disproportionately impacts lower-income adult smokers.  A 2014 study done by the Centers for Disease Control and Prevention found that 39.8 percent of adults in Montana who earn less than $15,000 are smokers, while only 10.8 percent of adults who earn $50,000 or more are smokers.  Not only will raising taxes hurt the most vulnerable income earners, it also creates an unstable revenue source for the state.

Montana’s tobacco tax collections have decreased by an average of 1.4 percent annually for the last 10 years.  The proposed tax increase would cause a further decline in tax revenue.  In states like New Jersey and Hawaii, which substantially increased tobacco taxes in 2007 and 2010 respectively, there has been a drastic reduction in tobacco tax revenues since the taxes were raised. 

SB 354 would also impose significant burdens on e-cigarettes and heat-not-burn products that have the potential to reduce both the financial stress that smoking cigarettes has put on the U.S. healthcare system and the human toll that arises from traditional smoking.  Regulating these two products in the same way is unwise and will give smokers trying to quit fewer options to do so in the most harm reducing manner.

Finally, history has demonstrated that all too often excise taxes on products fail to cover the cost of the programs they are designed to fund, as consumers move to purchase the products out-of-state, online, or through illegal sales.  Therefore, I urge you and your fellow representatives to oppose SB 354.

Sincerely,

Tom Schatz

President, CCAGW