Bill seeks alcohol, tobacco tax hike

Saying Nevada has the smallest government in the country, Assemblywoman Peggy Pierce, D-Las Vegas, called for approval of a bill sharply increasing state taxes on alcohol and tobacco products.

She said that reduction happened over the past 30 years as the state repeatedly refused to increase revenues.

"We didn't cut government as much as we starved it," she said.

She said she introduced Assembly Bill 333 and three other tax measures to provide the revenue the state needs to provide proper levels of services to Nevadans.

The measure increases the tax on a pack of cigarettes 90 cents to a total of $1.70. Assembly Taxation Chairwoman Marilyn Kirkpatrick, D-Las Vegas, said the bill projects the legislation would raise more than $200 million a biennium.

The proposal is one of two tobacco price hikes heard by committees Tuesday. The other was Senate Bill 386 which was presented to the Senate Revenue Committee, drawing testimony from the same group of supporters including the American Cancer Society and Jennifer Hadayia of the Washoe Health District.

Hadayia told both committees it has been proven a 10 percent increase in the cost of tobacco products cuts the number of smokers by 4 percent.

Amy Ballou of the American Lung Association made similar statements saying higher prices are the best way to reduce the number of smokers - especially among juveniles just starting to smoke.

Pierce's bill drew opposition from several businesses including Wendy Garner of Carson Cigar Co. who said when the tobacco taxes were raised in 2003, sales of their premium cigars plummeted. She said the proposed increases would seriously damage their business, which she said employs seven people in the capital.

Michael Frey of Las Vegas said he has six stores selling premium tobacco products in Southern Nevada. The proposed increases would force him to close four of them. He said it would add up to $3 a cigar to his prices.

"As much as they are loyal customers, they would stop buying in Nevada and go to the Internet," he told lawmakers.

A spokesman for Frey told lawmakers the increase could force up to 35 layoffs.

Sean Higgins representing Terrible Herbst said more than 50 percent of their sales at some 100 locations are tobacco and alcohol.

Peter Kruger representing the cigar industry questioned whether the projected revenue would ever be realized. He said as the taxes on alcohol and tobacco are raised, sales go down, taking revenue to the state down with them.

He too said higher taxes will just drive more of the business to the Internet, which generates no revenue to the state.

Pierce's bill also raises the price of alcoholic beverages. The tax on a gallon of beer would rise 9 cents to 25 cents, a gallon of wine from 70 cents to a dollar and hard liquor from $3.60 to $4.50 a gallon.

Opponents representing the liquor distributors said sales there would also move more to the Internet.

They said when liquor taxes were raised in 2003, there was almost a two-year lag before revenues recovered. The increased prices, they argued, just resulted in buyers moving to lower priced beverages.

The committees took no action on either measure.