Kenneth Evans is President at Urban Chamber of Commerce
Throughout Nevada, our chambers of commerce strive to create a favorable environment for every type of business imaginable. By promoting entrepreneurship, economic development, and job opportunities, we can ensure a better life for every Nevadan and their families.
It’s easy to forget that when you boil it down, families are at the intersection of our economy and political institutions. Our leaders make decisions every day that trickle down to the wallets, well-being, and safety of hard-working Nevadans. As such, it’s important for business leaders to come together with community groups to ensure we propose and advocate for new bills to become law that promote substantive improvement in the quality of life for all Nevadans, small business owners and individual households alike.
Congress recently proposed the Tobacco Tax Equity Act of 2021, which would double the federal tax on all tobacco products. While we anticipate this act will have limited success in terms of smoking cessation efforts, our immediate concern is that it will result in unintended consequences that hurt both small businesses and lower income households in one fell swoop.
In our state alone, over 2,630 businesses are responsible for 90% of all cigarette sales. These retailers are convenience stores, gas stations, and similarly sized retail outlets – all of them small businesses that rely on tobacco sales. By jacking up the overall price of cigarettes, we’d be threatening a substantial revenue stream for small businesses. Residents and tourists alike may opt for alternate, sovereign retail locations not subject to these taxes instead of patronizing our small business retailers.
Any hit to our small businesses’ bottom lines potentially equates to lay-offs and fewer job opportunities. Congress’s actions may only compound the effects of the pandemic on thousands of Nevadans’ financial security. As the Delta variant continues to spread, shouldn’t our leaders commit to an equally significant action in the opposite direction? Families need more help now, not less. We can support small businesses by abandoning efforts that could reduce revenue from tobacco sales.
This domino effect doesn’t stop with economic opportunity.
Again, as we mentioned above, the proposed 100% tax hike would have a disproportionate impact on lower income households. Habitual smokers that belong to low-income households that are forced to pay a multi-dollar increase in the price of tobacco products will have that much less income to cover other items in their household budget. This could be detrimental to their overall quality of life, especially if it impacts their food and beverage portion of their budget. A significant amount of the individuals employed by our Nevada small businesses fall within the lower income category, so they would be disproportionately impacted by this tax increase.
In summation, while we recognize and respect Congress’s desire to curtail the use of tobacco products, we ask that Congress reconsider this tax-based course of action. Instead, we recommend that Congress consider the investment of additional resources into smoking cessation programs and products. Doing this would address the additive nature of nicotine in order to cut down the demand for tobacco products. The ultimate goal is to gradually reduce the number of smokers versus causing a sudden impact to small business retailers. At the same time, the cost to lower income consumers and households would not be increased. This would avoid the unintended consequence of reducing the amount of income in households available for food sustenance items and other items required to maintain a reasonable quality of life.
If Congress continues to pursue its proposed tax increase, we are convinced it will have a detrimental impact on many of our small business retailers as well as lower income households in Nevada. Ultimately, the effect of Congress’s proposal will show up in our local economy and around the kitchen tables of Nevada families. None of us wants this to happen as we struggle and work together to recover from the impacts of the pandemic. For the good of all the above, I’m calling on all of Nevada’s Congressional delegation to reconsider any effort to double the federal tax of cigarettes. If we remain on this course, we risk permanently injuring what makes our state great: Boundless opportunity for all.