Court Rules that Alabama’s Fuel Tax is Discriminatory
The United States 11th Court of Criminal Appeals ruled this week that Alabama discriminated against railroads. This ruling comes due to the fact that railroads were made to pay a tax on fuels. Industries such as trucking and barges that compete with railroads were not required to pay the fuel taxes.
Court records show that CSX Railroad was paying a four percent sales tax on their diesel fuel purchases in the state of Alabama. Competing companies did not pay these taxes. .
CSX filed a lawsuit back in 2008 against the state Department of Revenue, but the district court ruled that “because the State’s motor carriers paid a roughly equivalent amount in taxes pursuant to the State’s fuel excise tax, the motor carriers’ exemption from the sales tax was not discriminatory. The district court had found that “the tax rate imposed per gallon of diesel fuel for rail carriers and motor carriers is essentially the same”
CSX appealed that decision.
In the appeal the U.S. 11th Court of Criminal Appeals ruled that Alabama did indeed discriminate against railroads by not taxing their competitors for the same fuels.
The court stated that “the state didn’t offer good enough justification for exempting the company’s competitors from paying the tax.
“In short, after establishing a comparison class of competitors and showing that its competitors did not pay the sales tax on diesel fuel purchases, CSX made a prima facie showing of discrimination under (the Railroad Revitalization and Regulation Reform Act of 1976),” the appeals court ruled.
“The burden shifted to the state to provide a ‘sufficient justification’ for the exemptions. It did not. We reverse the district court, hold that the State’s sales tax violates the 4-R Act (Railroad Revitalization and Regulation Reform Act), and remand to the district court with instructions to enter declaratory and injunctive relief in favor of CSX consistent with this opinion, “ the court ruled.
Tobacco Tax Hike: What it means to all
If there’s anything local convenience stores like, it’s a flurry of eager customers hoarding packs and packs of cigarettes before taxes skyrocket on July 1st, 2013.
On the said date, Minnesota’s tobacco taxes have increased by $1.60 per pack which adds up to the total state tax to $2.83 per pack. This increase means a Marlboro will now be at a state minimum of $7.83 per pack of 20’s.
What it means to the business
According to local stores and gasoline stations, their sales Sunday night saw the most dramatic spikes in their sales. Most of the stores have even reported doubling their monthly sales in the last week of June, just in time before the taxes go crazy. Another store reports selling 10 cartons in less than 20 minutes, and a woman claims to have bought stocks amounting to approximately $500, a definite steal compared to when Monday’s taxes go up.
Unfortunately for these stores, the almost sell-out performance of that week was met with very disappointing results come Monday.
What it means to the smokers
The increase in taxes was met with mixed inputs from the public’s end. While it was expected that smokers will react negatively, there are some heavy smokers who commented that the taxes may not impact their smoking habits, although they expect that it will affect their monthly budget.
A small number of smokers though, commented that higher taxes be considered as a sign to quit, or at least to motivate them to do so. Some also noted that they may resort to using electronic cigarettes, which are taxed less than tobacco.
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WHO’s programs not only improve overall health – taxes too
Smoking-related diseases claim at least 6 million lives annually and the numbers are projected to increase another 33% in less than 20 years. With this, the World Health Organization (WHO) spearheaded the Framework Convention on Tobacco Control in 2005 which aims to prevent premature deaths all over the world caused by smoking.
The program is designed to curb and minimize tobacco use, through raising taxes to 75% of the retail price, limiting smoking areas on public places, printing of warnings on cigarette packages, and banning of promotions and advertisements that encourage the act of smoking.
Of these methods, increasing taxes on cigarettes may prove to be more effective in lowering smoking-related deaths, based from an independent study conducted by the WHO.
According to this study, limiting designated public smoking areas could potentially prevent 2.5 million smoking-related deaths, while increasing taxes could prevent another 3.5 million fatalities.
Since its implementation in 2005, the said program has saved many lives in over 40 countries worldwide. In addition, higher taxes paid to purchase a pack of cigars can be redirected by the government to improve health and education systems.
Apart from impacting mortality rates and government taxes, the program, if effective, could eventually result to more affordable health care cost and healthier babies that do not suffer from the harmful monoxides from the outside environment.
According to Dr. Douglas Bettcher, from WHO’s non-communicable diseases department, “it is a win-win situation for health and finance ministries to generate revenues that have a major impact on improving health and productivity.”
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