December 06, 2003
Smoke 'em if you got 'em

Testimony on school finance reform has started, and that can mean only one thing: How can we raise taxes without making it seem like we really raised taxes? Answer: Raise taxes on select groups of individuals, such as cigarette smokers.

Danny McGoldrick, research director for the Washington, D.C.-based Campaign for Tobacco-Free Kids, said a $1-a-pack increase would raise $987 million in new tax revenues and save billions in long-term health care costs.

"This is a tremendous opportunity for the state of Texas to address its budget problems relating to education as well as to address the leading health problem in Texas, (which) is tobacco use," McGoldrick said.

But Bill Orzechowski, an anti-cigarette tax consultant, said raising the tax would increase the demand for black-market cigarettes.

"A lot of people will simply shop with their fingers over the Internet, or buy smuggled, or make cross-border shopping trips," said Orzechowski.

He agreed that raising the tax by $1 would result in a drop in consumption by 25 percent.

The testimony came on the second day of a hearing by a legislative committee trying to find new revenue options to fund public schools.

The committee also heard about various new business taxes, a statewide property tax and a personal income tax.

The committee wants to replace some of the $14.6 billion raised through local school property taxes.

I've addressed this before, and my position hasn't changed. Until our leaders have the guts to address the big picture and all available options, we'll keep finding more second class citizens to stick it to.

Posted by Charles Kuffner on December 06, 2003 to Budget ballyhoo | TrackBack

Hallelujah. Here you and I appear to be in in total agreement if I read you correctly.

I for one am sick and tired of a majority looking for a way to tax the hell out of a minority. I don't smoke. I never have smoked. Cigarettes and cigarette smoke disgust me and makes me physically ill. But targeted "sin taxes" make me even more ill. If people want the tax revenue raised, let them vote to impose it on themselves if they really want the revenue -- don't be cowards and vote to only tax others. Put your money where your mouths are.

DeTocqueville wrote some things about this phenomenon if I recall, and even the nationa's founders did in some sense when they spoke of the "tyranny of the majority." As do the Libertarians when they mention that "democracy is three wolves and a sheep deciding on what to have for lunch." Tobacco taxes are clearly and example of three wolves and a sheep. If a majority doesn't smoke, then hell, why not make them pay for everything I want?


Posted by: Tim on December 6, 2003 11:48 PM

Second Class Citizens? If only we could find a way to tax democrats...

Posted by: Michael on December 7, 2003 12:16 AM

The right thing for the wrong reason

While I agree that it's not a panacea, and that Texas needs a fairer tax system overall, I have no problem with raising cigarette taxes. It's too bad we needed a fiscal crunch to make it happen, but they serve a valid public policy objective.

Texas currecntly charges 41 cents per pack, which makes us 35th out of the 50 states. Studies show that a 10% increase in cigarette prices produces
a 3-5% drop in cigarette consumption among the general population and a 6-7% drop among minors, who are more price-sensitive. A 10% increase also causes 3% of minors to quit smoking completely.

This is not just a case of taxing an unpopular adult lifestyle choice - 90 percent of smokers begin as minors. Nicotine is possibly the most physically addictive drug known: only 15 percent of youths who smoke more than a single cigarette avoid becoming addicted. A one dollar increase in the cigarette tax is predicted to decrease youth smoking by 30% and overall smoking by 11%, and avoid 200,000 deaths in Texas alone over 40 years.

The amount of the increase has room for a reasonable compromise. A 51 cent increase yould raise almost half a billion dollars, yet would only bring us to 18th out of the 50 states.


Tobacco Taxation (University of Illinois presentation) [PDF]
[includes real case studies of tax increases]

Higher Cigarette Taxes: Reduce Smoking, Save Lives, Save Money
[admittedly anti-smoking, but gives hard data]

Raising Cigarette Taxes Reduces Smoking, Especially Among Kids [PDF]
[biased viewpoint, but references peer-reviewed studies]

Posted by: Matt on December 7, 2003 2:08 PM

I read somewhere that one consequence of raising cigarette taxes has been a tremendous increase in business for tax-free Indian cigarette sellers.

Posted by: P. Clodius on December 7, 2003 11:50 PM