Legislative Bill Calls For Sin Tax Hike

The Assembly Taxation Committee held a hearing Tuesday on AB 333, which calls for an increase on all alcohol and tobacco products. Democratic Assemblywoman Peggy Pierce said proposed increase in sin taxes really isn't that dramatic.

"We're talking about six cents on a bottle of wine," said Pierce. No one would even notice that or even a 45 cent hike on high end liquor."
The state hasn't raised taxes on tobacco since 2003. Pierce said the state is looking to raise revenue and this is a great place to start.

"We would generate $118 million annually."
However, some say this bill would actually do the opposite of what's intended.
"We believe customers will seek alternative sources of supply to buy their alcohol and tobacco and not use traditional retailers," said Peter Kruger, a spokesman for the Cigar Association of America.

One of those alternative sources is the Internet.

"Click on the Internet and you'll see people offering tobacco products," said Kruger. "It's significant. It's huge and as the tax rate increases, consumers choose that source of supply."
That's one source the state has no way of tracking and taxing.. Pierce said history shows her bill will not backfire.
"In terms of dollar value, the taxes went up after we raised them in 2003 and I anticipate that will happen again," said Pierce.

There is more to this bill than raising money. Health is an issue being raised, too.
"We know in research, for every 10% increase in tobacco products, you see a 4% decrease in usage," said Jennifer Hadayia of the Washoe County School District.
Those against the bill said a hike in tobacco and alcohol taxes would hurt gaming and convenience stores at a time they are already struggling.