A couple days ago I wrote:
When I talked to Jeff Barber about the show yesterday, he told me that Dr. Thode was claiming all the state’s cigarette tax revenue would be going to the NIZ.
I’m not sure if I misheard Mr. Barber or if he misheard Dr. Thode, but I will take the responsibility for getting this wrong. Dr. Thode’s actual claim was that all of the cigarette tax revenue in the “Lehigh Valley area” would be sequestered by the NIZ.
Here’s the quote from his appearance on Business Matters:
“You know what the excise tax is on one carton of cigarettes? $16. You know how many cartons of cigarettes are sold in the Lehigh Valley area in one year? 5 million cartons. Do the math. $80 million in excise taxes a year are paid by cigarette wholesalers just in the Lehigh Valley area. Now you put those in the NIZ and that $80 million…”
At that point Mike Fleck starts interrupting Dr. Thode and he doesn’t get to finish, but you can see where he’s going with this.
This argument is barely less absurd than the position I originally attributed to Dr. Thode.
There is only one cigarette wholesaler in the NIZ – City Center Wholesale, which is really just Dorward Wholesale. Here’s the key graf from Matt Assad’s article on this:
It’s unclear how much tax money the new City Center Wholesale will generate, or even how much of the cigarette tax it collects will be eligible to flow into the NIZ fund, but Dorward’s 2010 ledger shows how quickly the tax on cigarettes can pile up. Though his company is relatively small compared with other wholesalers, Dorward said it sold 450,000 cartons of cigarettes last year. That’s 4.5 million packs of cigarettes taxed at $1.60 per pack for an annual tax total of $7.2 million.
$7.2 million, not $80 million. One cigarette wholesaler is in the NIZ, not all the cigarette wholesalers in the LV.
To get the $80 million figure that Thode is using, you have to believe that all the cigarettes sold in the Lehigh Valley are coming from City Center Wholesale. Obviously that is not the case.
Now, could City Center Wholesale buy up other cigarette wholesalers? Sure. But are they going to buy up all the wholesalers in the LV? Are they at any point going to be selling all the cigarettes? Of course not.
I don’t see any plausible way to get to the $80 million figure Dr. Thode is using. This is simply a political talking point meant to confuse people about the NIZ.