New York Considers Cigarette Tax Hike


New York Gov. George Pataki, facing a multibillion dollar revenue shortfall related to the Sept. 11 terrorist attacks, is considering raising the state's already highest-in-the-nation cigarette tax by up to 39-cents per pack.

Sources, familiar with the deliberations of Pataki's budget advisers and speaking only on condition of anonymity, said the cigarette tax increase was one proposal under consideration as the governor seeks to deal with a potential $9 billion revenue shortfall, according to the Buffalo News.

Supporters of the move said it would reduce smoking while opponents said it would hurt convenience stores and drive customers to Indian reservations or to other states where they could obtain cheaper cigarettes.

Gov. Pataki refused to comment, but Pataki warned, "It's going to be a very difficult year coming up and we're all going to have to look to see how we can tighten our belts, reduce costs and operate more efficiently."

Such a cigarette tax increase, would raise New York's per pack tax to $1.50. Currently, New York's $1.11 per pack state tax is the highest in the nation, although state of Washington voters last month approved a tax increase to $1.42 per pack, effective in January.

Pataki has said the state's revenue shortfall, which he blames in large part on the economic disruption caused by the terrorist attacks on the World Trade Center, could be up to $3 billion for the state fiscal year that ends March 31. For the next fiscal year, the shortfall could be as much as $6 billion, the report said.

In 1999, Pataki convinced the Legislature to raise the state cigarette tax by 55-cents per pack, effective March 1 of last year. At the time, the increase was expected to raise an extra $340 million annually.
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