Md. Small Enterprise Chief raises the alarm in regards to the Democrats’ finances reconciliation bundle – Maryland Issues photo.

From Ashish Parikh

The author is the chairman of the Asian American Retailers Association of Maryland.

The framework of the recently released $ 3.5 trillion Federal Budget Reconciliation Package brings new hope to those of us who are ready for a new generation of policies to lift our poorest communities out of poverty and the side to open a new chapter focused on post-pandemic recovery. And with Congress trying to get a record infrastructure deal and budget that works for everyone, I’m very optimistic about this future.

However, I am concerned that a possible provision will only undo much of the historic achievements of the bill. To pay for the robust package, some Democrats are considering increasing the federal excise tax on tobacco products, which would raise very serious concerns for our retailers and our most deprived communities.

First and foremost, these policies threaten the very survival of our small businesses. As the chairman of the Asian American Retailers Association of Maryland, I represent convenience stores, gas stations, liquor stores, grocery stores, and many other retail businesses across Maryland. I’ve seen firsthand the grave impact of COVID-19 on these key companies as they have struggled to survive, some of them unsuccessful.

This industry desperately needs federal aid to return to pre-pandemic operations, but an excise tax on tobacco products would completely wipe out any resources allocated to this cause under the reconciliation package.

In Maryland, cigarettes account for up to 40% of sales in convenience stores. Increasing taxes on these products would therefore have a significant impact on their ability to generate income and recover from losses they have suffered for more than a year.

I envision that this legislative burden would be too great for many of these weakened businesses and unfortunately lead to bankruptcies and store closures. These policies will only add to the excessively high unemployment rate Maryland is currently facing.

The taxes on tobacco products are highly regressive taxes that have no place in our modern tax law.

As reported by the Cato Institute, low-income smokers spend nearly 25% of their annual income on cigarettes. Meanwhile, people in the higher socio-economic classes only spend 2% of their income on cigarettes.

A rise in federal excise taxes on tobacco products would only exacerbate this astonishing gap between the richest and poorest Americans.

During his campaign last year, President Biden consistently pledged not to impose taxes on those who earn less than $ 400,000 a year. However, if the Democrats in Congress increased those regressive taxes, they would be breaking that promise and abandoning a vision for which Americans turned up in record numbers less than a year ago to vote.

Smoking cigarettes is certainly a habit that I don’t encourage, but instead of punishing users, we should dedicate resources to help those who wish to quit smoking. Vapor products have helped numerous smokers quit their habits and the transition to these products has not had a negative impact on our small businesses. However, instead of endorsing these safer alternatives, lawmakers are trying to introduce an equivalent tax despite their proven relative health benefits.

I am grateful for all our Washington lawmakers are doing to combat injustice and revitalize our wounded industries. I hope that your commitment to these causes will enable them to see the dangers of the policies they are considering under the Law of Reconciliation.

One thing is clear, however. Legislators cannot claim to be a pioneer for small businesses and at the same time support an excise tax on tobacco products.