News & Observer | newsobserver.com | Easley's 'sin taxes' called unlikely

Published: May 13, 2008 12:30 AM
Modified: May 13, 2008 03:38 AM

Easley's 'sin taxes' called unlikely

He pushes teacher pay, mental health

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Audio: Gov. Mike Easley explains his proposed increase in the tax on alcoholic beverages.

WHERE THE MONEY MIGHT COME FROM

How North Carolina's beer, wine and liquor excise taxes compare as of Jan. 1:

BEER

HIGHEST: Alaska at $1.07 per gallon.

LOWEST: Wyoming at 2 cents per gallon.

NORTH CAROLINA: 53 cents per gallon. Easley's proposal would raise it to nearly 96 cents per gallon -- or from 5 to 9 cents per 12-ounce can of beer.

WINE

HIGHEST: Alaska at $2.50 per gallon.

LOWEST: Louisiana at 11 cents per gallon.

NORTH CAROLINA: 79 cents per gallon. Easley's proposal would raise it by 15 cents to 94 cents per gallon.

LIQUOR

HIGHEST: Washington at $19.43 per gallon.

LOWEST: New Hampshire, Vermont and Wyoming show no excise tax revenues.

NORTH CAROLINA: $10.36 per gallon. Easley's proposal would raise it to $10.77 per gallon.

FEDERATION OF TAX ADMINISTRATORS, TAX FOUNDATION, GOV. MIKE EASLEY

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Gov. Mike Easley's plan to give teachers dramatic raises and spend $68 million to reform the mental-health system depends on his ability to sell increases of "sin taxes" to the legislature in an election year.

Easley revealed his $21.5 billion budget plan Monday. He proposes paying for teacher raises by increasing taxes on cigarettes and funding mental-health reform with a higher alcohol tax.

Easley said a 20-cent increase in the tax on cigarettes, to 55 cents a pack, would help raise teachers' salaries an average of 7 percent. He said that would bring the state's teacher pay to the national average of roughly $50,000.

The alcohol tax increase -- an additional 4 cents on a can or bottle of beer, 3 cents on a standard bottle of wine and 4 percent on liquor -- would help pay for changes in mental-health care, including nearly 500 new positions for state hospitals and local mental-health offices.

Easley told reporters that he doesn't think legislators, who go into session today, would anger voters by increasing sin taxes. Easley, who cannot seek a third term, pitched the taxes as a painless solution.

"If four cents a can, if that causes somebody economic hardship," he said, "then they're probably drinking too much and going to be customers of mental health, substance abuse sooner or later anyway."

Legislators dubious

Easley's confidence seemed out of touch with the leaders of the legislature, which is controlled by Easley's fellow Democrats.

House Speaker Joe Hackney said he was skeptical any tax hikes would pass.

"We didn't anticipate any new taxes this year," Hackney said. "This is a year for tightening our belts. This is a year for looking for efficiencies. This is what our constituents are doing."

Senate leader Marc Basnight said he thinks that the state's taxes on cigarettes and alcohol are low but that the proposal to raise them comes at a bad time.

"Any kind of tax increase in this kind of climate, not just because of the election ... in this kind of an economy is very difficult and maybe not too wise," Basnight said.

Sen. Phil Berger, the Senate Republican leader, said a struggling economy is the worst time to raise taxes.

"It sounds like what he's doing is one last tax hike to ensure his legacy," said Berger, who is from Eden in Rockingham County.

North Carolina already has the nation's fourth-highest tax on beer.

"An 80 percent increase in the beer tax at the same time that North Carolina consumers are struggling with the highest gas prices they've seen and record numbers of home foreclosures, we just don't think that's a good idea for North Carolina consumers," said Dean Plunkett, executive director of the N.C. Beer and Wine Wholesalers Association.

Educators like raises

Easley has made raising the state's teacher pay to the national average a priority for his last six months in office.

"We are certainly pleased to see his continued commitment," said Sheri Strickland, president of the N.C. Association of Educators, which represents 70,000 teachers, school administrators and support staff.

Amy Constant, a veteran fifth-grade teacher at Fox Road Elementary School in North Raleigh, cheered when she heard about the proposed raises.

"We've put the money, time and energy into education so we can be prepared for students, and we should be compensated accordingly," she said.

But some teachers did not react enthusiastically to the proposed raises. The raises would be applied unevenly, with less experienced teachers getting a greater percentage increase.

"That could mean a 30-year veteran like me could get 3 percent," said Susan Sinclair, a kindergarten teacher at Durham's Hope Valley Elementary School. "We're the veterans, the ones who have been in the trenches."


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ben.niolet@newsobserver.com or (919) 829-4521
Staff writers Samiha Khanna, Kinea White Epps, Ryan Teague Beckwith and news researcher Lamara Williams contributed to this report.
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