Sin Taxes In The Florida Keys
Monday, August 15, 2016

Sin Taxes In The Florida Keys

Sin taxes in the United States are implemented, according to those implementing them, to discourage unhealthy behavior. These taxes are levied against such things as tobacco, alcohol, and in some jurisdictions, items that are loaded with sugar such as sodas and candies. The debate still rages as to whether these taxes actually discourage the unhealthy behaviors or are even a success at all. While a sin tax’s initial goal is to reduce unhealthy behavior, they are important sources of revenue for states and local governments.

The first historical sin tax in the United States, the Whiskey Tax, actually led to a rebellion. The tax was initiated to help cover the costs of the Revolutionary War. Though the Whiskey Insurrection was unsuccessful, it established the United States’ ability to levy excise taxes. Sin taxes were also used to generate revenue to fund the Civil War. However, with the exception of sin taxes on alcohol and tobacco, all were repealed following the end of the conflict. In 1951, in order to finance the Korean War, the federal government increased the excise tax on cigarettes from seven cents per pack to eight. Another increase in 1983 doubled the tax to sixteen cents per pack.

As of January 1, 2015, according to the Tobacco Institute, all 50 states and the District of Columbia levy taxes on cigarettes. In addition, 600 towns, cities, and counties also levy additional taxes on tobacco products. New York imposes the highest excise tax on cigarettes, reaching an additional $4.35 per pack. Missouri has the lowest sin tax on cigarettes at just $0.18 cents per pack.

Some states wholly rely on sin taxes as a source of revenue. The nation’s smallest state, Rhode Island, for example, is the most dependent on sin taxes as a source of revenue. 15.9% percent of their tax revenue is in the form of sin taxes. Most is received from gambling.

New Hampshire’s sin taxes come mostly from the sales of tobacco. 9.9% of the state’s tax revenues come from cigarette taxes. Since New Hampshire does not have a sales tax or a state income tax on earned income, they rely heavily on these excise taxes as a source of revenue.

It is not just federal or state jurisdictions that impose excise taxes. Cities and counties, as stated above, also charge these taxes. They can produce revenues that are then spent on infrastructure and social services. The Florida Keys is one jurisdiction that is proposing the addition of a sin tax on alcohol and tobacco.

The proposal could provide much-needed revenue to fund worthy non-profit groups. The draft proposal is set to go in front of Monroe County commissioners at an August 17 meeting in Key West. If approved, it would then move to ask voters on November 8th if they would support such a tax as a means of offsetting the millions in property taxes that already go to these organizations.

The tax, which would only be on cigarettes and alcohol served in bars, will mostly affect tourists, who are expected to pay more than half of all revenues generated from the tax. Such a tax may well generate $10 million in annual income. A positive vote in November would not create the tax. It would, however, allow the favorable results to be sent to the Florida legislature showing support for the creation of the tax.

Do you have questions about potential sin taxes in your area? Are you unsure about how it affects your business?  The Miami Beach tax attorneys at Zuckerman Law can assist you.  We have over 30 years of experience sorting out tax issues and giving people peace of mind.  Give us a call for your free consultation today.

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Ft. Lauderdale, Florida 33394