Washington, D.C. - Citizens Against Government Waste (CAGW) and the Tennessee Center for Policy Research (TCPR) today criticized the Tennessee state government for beginning a cigarette surveillance program to enforce a new cigarette tax.  The state increased taxes on cigarettes by 42 cents to a total of 62 cents per pack on July 1, 2007 to help pay for education reform.

“Because of this ill-conceived tax hike, police resources are being wasted staking out Tennessee citizens going about their personal business, even across state lines,” said CAGW President Tom Schatz.  “Instead of raising cigarette taxes, the state of Tennessee could have cut spending and saved $125 million we identified in the 2007 Tennessee Pork Report.”

The Knoxville News Sentinel reported yesterday that “the idea is for the monitoring agent to spot a person buying cigarettes in volume at an out-of-state market, then departing in a vehicle with Tennessee license tags.  Starting today, monitoring agents spotting such a suspect will call an arresting agent who will stop the car when it enters Tennessee.”

“Tennessee is engaged in an unconstitutional operation by involving itself in interstate commerce,” said TCPR President Drew Johnson.  “I encourage the state to end this bizarre program now, rather than embarrassing Tennesseans and wasting taxpayers’ money in a hopeless effort to defend this absurd scheme in court.”

According to the Nashville City Paper on September 21, 2007, “July cigarette tax revenues, the first month of enforcement, were about $14 million less than the state estimated.”  If that pace continues over the next year, the state will end up with only $62 million after originally estimating $230 million in annual revenue.

“Predictably, the promised revenue in Tennessee has failed to materialize.  As has been observed in other states, excessively high excise taxes lead many consumers to circumvent the tax by purchasing products out-of-state, online, or through illegal sales.  State officials should cut waste, not increase taxes, to pay for any new programs,” concluded Schatz.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.