Maryland Cigarette Tax
March 1, 2011

Letters to Officials

The Honorable Martin O’Malley
Office of the Governor
100 State Circle
Annapolis, Maryland 21401

Dear Governor O’Malley,  

As you know, six senators recently unveiled a package of bills in an effort to raise an estimated $827 million in additional state revenue.  Designed to soften the blow of your proposed budget cuts, lawmakers have specified that newly generated revenue go toward restoring your spending reductions.  On behalf of the 22,888 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in the state of Maryland, I urge you to veto any bill that increases taxes on Maryland constituents and counteracts your efforts to cut excess spending from the state budget. 

The new bills propose sweeping tax increases, including raising the gas tax by 12 cents per gallon and continuing the “millionaire’s tax,” a 6.25 percent tax on annual incomes of more than $1 million.  Additionally, despite the fact that Maryland consumers already pay an exorbitant $833 million per year in cigarette taxes, lawmakers have proposed increasing the cigarette tax by $1 per pack.  Legislation has also been introduced that would raise excise taxes by 568 percent for distilled spirits, from $1.50 to $10.03 per gallon; 640 percent for wine, from $0.40 to $2.96 per gallon; and 1,188 percent for beer, from $0.09 to $1.16 per gallon.

Proponents of these bills have argued that raising state excise taxes would increase revenue and prevent important budget cuts from going into effect.  However, history has shown that raising excises taxes does not produce projected revenue, as such tax increases drive purchases across state lines or to untaxed or lower-tax venues.  Of the 57 excise tax increases that states implemented between 2003 and 2007, only 16 met or exceeded revenue targets. 

Moreover, your efforts to trim the fat and make necessary reductions in the size and scope of state government should not be counteracted by increasing tax rates.  Excise taxes are extremely regressive and disproportionately impact the poor and those living on fixed incomes.  These new tax hike proposals will undoubtedly burden hard-working Maryland residents at the expense of your attempts to shrink the state’s bloated bureaucracy.   

CCAGW urges you to veto any bill that increases taxes and to instead work with lawmakers to cut wasteful, duplicative and unnecessary government spending without any offsets. 

Sincerely,

Thomas A. Schatz
President, CCAGW