KNOXVILLE, Tenn. – As Tennessee lawmakers raised cigarette taxes to 62 cents per pack in 2007, one veteran representative wanted even more, saying it “should have been a dollar.”
Prosecutors say that was part of Rep. Joe Armstrong’s elaborate scheme not to raise revenue or curb smoking rates but to line his own pockets. He’s accused of failing to pay taxes on money he made — more than $300,000 — by buying tax stamps at the old rate and selling them at the higher one.
Armstrong’s attorneys said at his federal trial Tuesday that he isn’t corrupt, but simply a victim of his accountant’s poor advice.
The indictment against Armstrong alleges he devised a scheme beginning in 2006 to profit from the cigarette tax hike planned by then-Gov. Phil Bredesen, a fellow Democrat. Armstrong was by Bredesen’s side when he toured east Tennessee to promote the 42-cent increase as a way to raise education funding and said at the time it should have been as much as $1 per pack.
According to the charges, the longtime legislator from Knoxville borrowed $250,000 to buy tax stamps through a wholesaler at the old 20-cent rate and then sold them at a profit after lawmakers more than tripled the tax in 2007.