NC - Reynolds American employees protest any increase in cigarette taxes..

June 19, 2009 - North Carolina (NC) Governor Beverly Perdue proposed increasing the tax by $1 per pack (increase in the cigarette tax from 35 cents per pack to $1.35). House and Senate budget plans didn't include that proposal.

The so-called sin taxes (on tobacco and alcohol - 5 percent tax on alcoholic beverages) would help generate more than $400 million for the state budget that begins July 1 and ends June 30, 2010. Senate President Pro Tem Marc Basnight has said he supports an increase in both taxes. More than 73 percent of North Carolina adults support or strongly support an increase in the state's cigarette tax as a way to close a growing budget shortfall, according to an Elon University poll.

Reynolds American Inc. said North Carolina Governor Beverly Perdue is putting manufacturing jobs at risk with her proposal to raise cigarette taxes by $1 a pack. “We want more jobs, not taxes,” Daniel Delen, chief executive officer of Reynolds’ R.J. Reynolds Tobacco Co. unit, said today during a rally in Raleigh, North Carolina’s capital. “Taxes cause direct job losses.” More than 400 Reynolds employees wearing yellow T-shirts emblazoned with “NC Needs More Jobs Not More Taxes” gathered to urge legislators to reject raising cigarette taxes in the state that grows the most tobacco in the U.S. and is home to Reynolds and Lorillard Inc.

Legislators resume negotiations this week on slashing the state budget that takes effect July 1. A compromise to be hashed out among House and Senate members may include a “small increase” in cigarette taxes after the House last week passed a budget with no increase. The plan to raise cigarette taxes reflects that “we simply need revenue,” Perdue, a Democrat elected in November, said in an e-mailed statement. Despite legislative opposition, she said, “we have to be direct and upfront about the costs of health care directly tied to the use of tobacco.”

The federal cigarette taxes jumped 62 cents to $1.01 a pack on April 1, intensifying pressure on tobacco companies to fight state increases that may crimp cigarette demand.

North Carolina (with a budget gap of more than $4 billion) is one of at least 25 states where legislators are considering an increase in cigarette taxes to cover budget shortfalls, according to the Web site of the National Conference of State Legislatures. (Tobacco tax increases still appealing...)

References: Reynolds Says North Carolina Tax Plan Imperils Jobs (Update2) by Chris Burritt, Bloomberg.com, 6/16/2009; Hundreds of Tobacco Workers Protest Against Proposed Tobacco Tax Hikes , The Wall Street Journal, 6/16/2009.

Related news briefs: North Carolina House panel deletes cigarette tax increase..; Reynolds American - NC Governor's tobacco tax increase - Outrageous..; NC Governor calls for an increase in the tobacco tax..; North Carolina - may consider raising taxes on alcohol and cigarettes..; North Carolina tobacco companies and growers oppose possible tax increase..