Niles’ legislators fuming about cigarette tax
Published 6:20 pm Tuesday, June 29, 2004
By By JAMES COLLINS / Niles Daily Star
NILES -- Government officials in our district are opposed to the new cigarette tax increase because of the negative impact they anticipate on local and state businesses.
Michigan State Sen. Ron Jelinek, R-Three Oaks, and Michigan State Rep. Neal Nitz, R-Baroda, voted against the increase and expressed concern that it will cause even more Michigan smokers to buy their cigarettes out of state.
Jelinek had similar concerns and thinks the new tax may hurt Michigan in more ways than just losing cigarette sales.
With more people travelling to Indiana for tobacco, he thinks Michigan consumers may also go shopping, go out to eat and fill their vehicles up with gasoline.
While communities like Niles, that are so close to the Indiana border, expect to experience an obvious decrease in cigarette sales, Jelinek said the large price difference may reach to other counties as well.
With such a significant price difference, Jelinek said people from even further north will make trips across the border to buy tobacco.
Nitz said he already knows people from as far north as Lansing that are travelling to Indiana to buy cigarettes.
And with lower cigarette taxes in Ohio and Wisconsin, he said it will also affect sales on the east side of the state and in the Upper Peninsula.
In addition to having neighboring states with lower taxes, Nitz said discount internet sales and an increased potential for bootlegging could also take away from sales in Michigan.
Jelinek said the anticipated revenues from the tax increase is $300 million per year.
Nitz thinks with a loss in sales across Michigan, the state will be lucky to get half of the anticipated revenues.
He said supporters of the bill may attribute a loss in tobacco sales to a decrease in the amount of smokers, but he thinks the loss will simply be due to smokers finding other places to purchase cigarettes.
Jelinek also disagrees that the tax hike will cause a large number of people to quit smoking.
He said statistics have shown that the last state cigarette tax increase of 50 cents, did not cause a significant decrease in the amount of smokers in Michigan. So, he does not anticipate this increase to cause many people to quit either.
Jelinek acknowledged the need to balance the budget, but thinks the state should consider making more cuts before raising taxes.
One alternative source of revenue could come through a bill that Jelinek turned in last week that would tax consumers two cents on every plastic bag that they use at retail stores.
If this bill were to pass, Jelinek said it could bring in $60 to $86 million in state revenues.
He said it provide both environmental and economic benefits to Michigan by discouraging the use of plastic bags and by providing an additional source of revenue for the state.