For Immediate Release: May 12, 2000
Contact: Amy Ridenour 202/543-4110 x110 or [email protected]


Proposed Louisiana Tax Hike Would Hurt Low-Income Residents the Most

 

The $377 million tax increase proposed by Louisiana Governor Mike Foster falls disproportionately on lower-income families and should be scrapped, says the National Center for Public Policy Research.

In part to balance Louisiana's nearly $14 billion proposed state budget, now approximately $227 in the red, Governor Foster has proposed a number of regressive taxes, among them:

According to a June 1996 study by Citizens for Tax Justice and the Institute on Taxation and Public Policy, the poorest 20% of families nationally pay an average 16.7% more of their income toward excise taxes on cigarettes, beer and gasoline than do the richest 1% of families. In Louisiana, that figure is 15.22%.

"Despite the fact that excise tax increases hurt the poor, they are the most politically-correct form of tax hike," said Amy Ridenour, president of The National Center for Public Policy Research. "Politicians justify tax increases on consumer goods like beer, liquor and tobacco ­ so-called "sin taxes" ­ by saying that the taxes will aid public health. What they don't say out loud is that they believe that they know better than the public about what the public's buying decisions should be. It's yet another manifestation of the nanny state, and it is one that hurts the poor the most."

In April, an anti-poverty group, the Baton Rouge Catholic Worker, held a four-day-long vigil at the state capitol in Baton Rouge opposing new taxes on the poor.

Despite some significant support for the governor's new tax proposal among leaders in the legislature, an April poll found that Louisiana residents oppose new taxes by a wide margin: 3-1 in most cases, with new taxes on business opposed 3-2.

Louisiana residents believe the state's fiscal shortfall is due to "spending too much" versus "not enough revenue" by a 73-16% margin, according to the April 6-15 poll by Southern Media and Opinion Research of Baton Rouge.

Governor Foster is proposing a $13.8 billion state budget fort the 2000-2001 fiscal year. In 1995-96, the last year in office of the previous governor, Edwin Edwards, Louisiana spent $11.7 billion. This represents an 18% increase, 7 points over inflation. State-generated revenues grew over the period from $7.5 billion to an expected $9.2 billion for 2000-2001.

The Foster Administration has proposed cutting 5,000 state jobs to help trim the budget, but has not proposed a reduction in spending sufficient to make a tax increase unnecessary.

"Cigarette taxes, though possibly the most politically-correct of the tax increases proposed, are a particularly unstable tax on which to build a stable long-term state budget," said Ridenour. "Cigarette sales and tax revenues have declined steadily since the mid-1960s and likely will continue to do so. State-level tobacco tax increases are an especially risky long-term revenue source because of the possibility of another substantial federal cigarette tax increase and the fact that cigarettes are subject to large price increases as a result of lawsuits against the tobacco industry."

Louisiana cigarette taxes were last increased in 1990, by 20 cents per pack.

The National Center for Public Policy Research is a conservative/free-market think-tank established in 1982 and located on Capitol Hill in Washington, D.C. For more information, contact Amy Ridenour at 202-543-4110 or [email protected] or visit http://www.nationalcenter.org.

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