Wednesday, May 14, 2008

I'm off to moderate a panel this afternoon so you're stuck with just my story from today again...

RALEIGH -- The governor and lawmakers will soon battle over so called sin taxes.

Gov. Easley wants to increase the tax on cigarettes and alcohol. He says the money's needed to pay for teacher pay increases and mental health reform. Sin taxes are increasingly popular proposals to raise money.

As a tobacco state, raising the cigarette tax was political suicide in the past but times have changed.

Lawmakers bumped the cigarette tax three cents a pack in 1991. 14 years later it was increased from five cents to 30-cents in 2005. Just one year later it was raised five more cents. The tax still remains the seventh lowest in the U.S.

Now Gov. Easley wants to increase the tax again by 20-cents to 55-cents a pack. That would make North Carolina's tax tied for 12th lowest in the country.

"Certainly North Carolina is not as tobacco dependent in terms in the number of farmers involved," Sen. Richard Stevens (R-Wake) said. "We're still producing a lot of tobacco in North Carolina, but it doesn't have the same political impact it once did so I guess it's an easier target at that point."

The beer and wine industry finds itself on the flip side. The beer tax for instance hasn't been raised in decades but it is still one of the highest in the nation.

Right now the tax is roughly four cents a can which leaves North Carolina with the fourth highest beer tax in the nation. Gov. Easley's proposal would increase it to nine cents a can and the second highest in the nation.

"Our beer taxes and wine taxes are some of the highest in the nation and this type of proposal falls most heavily on North Carolina consumers who can at this time when the economy is not in great shape," Dean Plunkett from the NC Beer and Wine Association said.

While the beer tax hasn't changed since 1969, Plunkett says it comes up nearly every year.

"It tends to be that way," Plunkett added. "The legislature will always look for new funding sources and we tend to be the choice a lot of the time.

North Carolina's not alone. Many other states are proposing sin tax increases as well. Supporters say it's a volunteer tax and having that choice to drink or smoke is better than forcing a tax on everyone.

Both Democrats and Republicans at the legislature appear to oppose Easley's tax proposals. A final budget must be approved by July 1st.

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