It’s Income Tax day, so it seems like a tax related blog post is appropriate.
It seems as though our government has increased the tax on cigarettes and other tobacco products. According to the article, the increased tax revenue will go to help fund children’s health insurance programs nationwide, and it was a law enacted by President Obama (who, I seem to recall, pledged to cut taxes for the majority of Americans). The federal tax on a pack of smokes will go from 39 cents to $1.01. On top of that is any state taxes which may be levied, which range from 7 cents to $2.58 a pack. It seems as though pretty soon most of the retail cost of a pack of cigarettes will be made up of taxes, rather than the actual cost of the product itself.
I have mixed feelings on this. Why do we target cigarettes when we need to throw a little extra money into the coffers? Why not alcohol, firearms, jewelry, or any of a number of other luxury items? I guess smokers are easy targets. They are, after all, held captive by a nasty addiction and by habit.
On the other hand, the health risks of cigarettes are well-documented as are the benefits of quitting smoking. So, if higher taxes are what it takes to get people to stop smoking, then it may be worth it. Make it super-expensive to light up, and people will think twice. Or, to put it another way, if you want to destroy your life by smoking, it’s going to cost you.
But I think there are flaws in that argument.
The fact is, lower income and less educated individuals are more likely to smoke. These individuals are also most likely to be the ones who are unable to get extra help to quit (e.g. by getting nicotine patches or joining support groups). While some of these folks will see the tax hike as straw to break the camel’s back and force them to quit, others will simply go on paying.
We saw the same thing with gasoline prices. Pundits said the American people wouldn’t stand for it when gas prices hit $2 per gallon and would simply stop driving. Then $2.50. Then $3.00. Etc. Eventually we topped out well north of $4 a gallon, and I didn’t see any major boycotts of fuel. Yes, people cut back some and maybe made wiser use of their car trips. But despite the high prices, I sure had a lot of company as I was stuck repeatedly in traffic jams.
Likewise with smokers. Those held captive to the addiction aren’t likely to quit. They’ll simply cut back on other things. Like possibly food. Or clothing. Or heat. Or car insurance. They’ll find ways to keep their smokes. (I can’t tell you how many customers I dealt with when I worked in the supermarket who would be buying their food on public assistance money and then fork over half a paycheck for two cartons of cigarettes.) Just like we all found ways to keep driving our cars even though gas prices were high.
In other words, I don’t think that you can get the majority of smokers to quit by pricing them out of their addiction. For that to work, make the tax on cigarettes $50 or $100 per pack. Of course, that’lll never fly, since the tobacco industry has too much lobbying clout.
I also think it borders on the absurd to levy a tax to fund a specific need(children’s health insurane) while at the same time hoping that the higher taxes will drive fewer people to use the product being taxed. In short, you’re eliminating your tax base, so where are you going to get your money from? Why not follow this logic, make marijuana, meth, cocaine, and other drugs legal, and just tax them heavily to fund anti-drug campaigns? (Though this idea has some merit. Perhaps we could convince some congresspeople to enact an abortion tax. Say $10,000 per abortion. Tax proceeds would be used for reproductive health education in public schools.)
Then again, the after-effects of smoking put tremendous strain on our health care system, so I can see forcing smokers to pay a higher share of those costs. And using a tax on cigarettes to fund public healthcare initiatives is one way to do that.
By this logic, though, we can also say that diabetics put a strain on our health care system as well. By reducing obesity, we can also cut back on our health care costs. Why not put a tax on unhealthy foods and drinks? For example, prepared items that have more than x calories, y grams of fat, and/or z grams of sugar per serving could have an excise tax of 1 cent per extra calorie or gram of nasty stuff. That would get the fatsos like me to think twice before reaching for those doughnuts.
So, mulitple arguments can be made pro and con. What’s the solution? I’m glad I’m not in politics, so I don’t have to decide one way or another.