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House Co-Sponsorship Memoranda
House of Representatives
Session of 2013 - 2014
Regular Session
MEMORANDUM
| Posted: | February 25, 2013 01:56 PM |
|---|---|
| From: | Representative Ed Gainey |
| To: | All House members |
| Subject: | Smokeless Tobacco & Cigar Tax for Mass Transit/Road & Bridges Funding 2013-14 |
| In the very near future I intend to introduce legislation that levies a tax on smokeless tobacco and cigars and devote that revenue solely to funding for Mass Transit & Infrastructure (roads & bridges). Specifically, my legislation would amend the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, by adding an article called the Tobacco Products Tax. A 25% tax on wholesale price of smokeless tobacco products and cigars would be imposed. The House Appropriations Committee (D) estimates that revenue generated by a tax on other tobacco products (including cigars) at 25% of the wholesale price would be approximately $44.3 million in FY 2013-14. It is important to note that cigarettes are excluded from this legislation. Just about everywhere in the United States people pay a state excise tax when they buy cigars, chewing tobacco, snuff, or loose tobacco. Pennsylvania is one of only two states (the other is Florida) to exempt cigars from taxation and is the only state not to tax the other forms of tobacco. Compared to the 33 states that tax based on wholesale price, Pennsylvania’s proposed tax rate of 25% would fall in the middle for cigars (tied for 17th) and smokeless tobacco (tied for 15th) (see Table 1). Table 1. Distribution of states that tax smokeless tobacco based on wholesale price Tax on Wholesale Price States 0-10% TN, WV, GA, KS, VA 11-20% NC, KY, DE, MD, OH, IL, NE 21-30% IN, CT, NV, NJ, PA (as proposed) 31-40% MI, SD, HI, ID, RI 41-50% CA, NY, NH, IA, MT Greater than 50% OR, MN, AK, WA, ME, FL, MA (calculations based on Federation of Tax Administrators, “Other Tobacco Products Tax, January 1, 2010,” http://www.taxadmin.org/fta/rate/otp.html ). While I know that $44 million in revenue is a drop in the bucket in terms of funding size, I believe that doing nothing to help is far worse. If nothing else, this legislation can assist (in addition to) and supplement the Governor’s Transportation Plan proposal. We must do all we can to adequately fund Transportation –Mass Transit and Infrastructure – we simply cannot wait any longer for dedicated funding. If you have any questions on this proposal, please do not hesitate to contact me. |
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Introduced as HB926