The primary concern when raising the cigarette tax is the loss of revenue to border states. Currently, Iowa benefits from having a lower cigarette tax rate than Minnesota, Wisconsin, South Dakota and Illinois. Consumers on the borders of those states often come to Iowa to save money on their preferred pack of cigarettes. While here to buy cigarettes, many will also buy items in our members’ gas stations and convenience stores and purchase ethanol blended gasoline from Iowa gas stations and convenience stores. If Reynolds’ tax increase went into effect, this business and tax revenue dries up.

Not only will Iowa lose tax revenue from residents of bordering states, but Iowans will begin crossing the border to purchase cheaper cigarettes, fuel their vehicles, and purchase convenience items. At a tax rate of $2.01, Iowa cigarettes will become more expensive than cigarettes in South Dakota, Nebraska and Missouri.

As our state faces revenue challenges, this is lost tax revenue that we can’t afford.

The cigarette tax increase is also mistimed. Cigarette smoking rates continue to decrease year after year, and youth are less likely than ever to pick up a cigarette. These rates will continue to fall year after year due to education, prevention and smoking cessation programs. Basing long-term revenue projections on a declining product is fiscally unsound and creates budget instability down the road.

For Iowa’s gas stations and convenience stores, many of which are family-owned small businesses operating in rural areas, this proposal is especially harmful. Cigarettes sales drive foot traffic. When that traffic disappears, so do sales of food, beverages, fuel and other everyday items. Fewer customers mean fewer hours for employees, less tax revenue, and tougher decisions for business owners who are already navigating inflation and rising operating costs.

Our members are not asking for special treatment - they are asking for smart tax policy. Raising Iowa’s cigarette tax would put local businesses at a competitive disadvantage, drive commerce across state lines, and ultimately leave Iowa worse off. Lawmakers should think twice before advancing a policy that harms Iowa businesses without delivering the revenue stability the state needs.

John Maynes is the president of government affairs for FUELIowa.