Tuesday, April 5, 2011 | 2:16 p.m.
CARSON CITY – The tax on a $10 cigar would rise from $3 to $5.50 under a bill debated in the Nevada Legislature on Tuesday.
The tax on a bottle of wine would inch up 6 cents, according to Assemblywoman Peggy Pierce, D-Las Vegas, who has introduced a package of bills to raise taxes.
Pierce told the Assembly Taxation Committee that Nevada is in its worst economic situation in 70 years and there are major cuts in education and other social services that she couldn't support.
“The state will be devastated if we do not raise revenue,” Pierce said.
She got support from a variety of health groups, including the American Lung Association, the American Heart Society, March of Dimes, Nevada Cancer Institute and the American Cancer Society.
But representatives from convenience stores, cigar businesses, and the cigarette and liquor industry argued such a tax hike would result in lower collections of revenue and hurt the economy.
Michael Frey testified he operates six stores that sell cigars in Las Vegas. If this tax is passed, he testified he would have to close four of the stores and lay off 35 of his 50 employees.
Peter Krueger, representing convenience stores and cigar businesses, argued that when taxes are raised, the tax revenue actually declines. He said such a tax hike would result in an "Internet black market" of cigarettes and liquor.
He acknowledged Nevada might need increased revenue and he said he would back a tax on services as long as it is not filled with exemptions.
Amy Bealieu of the American Lung Association said the proposed 80 cent increase on a pack of cigarettes would bring in an additional $63.4 million a year in taxes, while the proposed hike on other tobacco products would produce an additional $5.8 million.
Committee Chairwoman Marilyn Kirkpatrick, D-North Las Vegas, said Assembly Bill 333 would generate $235 million over the next two fiscal years.
Tom McCoy of the American Cancer Society said the last time cigarette taxes were raised was in 2003. An increase would mean a reduction in smoking, he said.
Other health representatives argued it would cut down on teen smoking and cut medical costs in Nevada.
Assemblyman John Ellison, R-Elko, suggested an increase in liquor taxes would have a big effect on the casino industry, where resorts sometimes give free drinks.
But Pierce noted that no casino representatives appeared at the Legislature to testify.
AB333 would raise the tax on a pack of cigarettes to $1.70 and the tax on hard liquor would increase from $3.60 to $4.50 per gallon. The tax on wine would jump from 70 cents to $1 per gallon; the beer tax would rise from 16 to 25 cents a gallon and cordials would be raised from $1.30 to $1.75 per gallon.
The committee didn't take action on the bill.