Thursday, May 26, 2005

Smoke 'em if you got 'em....

David Strom from the Minnesota Taxpayers League has an eye opening article on how smokers are paying the freight for nonsmokers, even before Pawlenty's proposed tax increase "user fee".

According to a study published in the Journal of the American Medical Association, the societal costs of smoking amount to about 15-24 cents a pack in 1986 dollars, or 27-43 cents a pack in 2005 dollars. Those costs are obviously substantially less than the taxes charged by the state and federal governments and being paid for by smokers through the tobacco settlements—amounting to 64 cents a pack in 1998. This year alone the state is getting about $200 million in tobacco settlement dollars from smokers, adding up to $1.6 billion paid into state coffers since 1998. Tobacco products are also subject to the 6.5% sales tax. “Smokers are getting reamed already,” said David Strom. “Blue Cross and the tobacco tax advocates are smoking something if they are trying to argue that smokers aren’t paying their way already. They are already paying about $1.60 a pack in direct and indirect taxes to the government per pack.”

“Compared to the high-end estimate of social costs per pack of cigarettes put out by the Journal of the American Medical Association of 43 cents a pack, smokers are subsidizing non-smokers to the tune of over a $1 a pack. Adding another 75 cents a pack is highway robbery!” said Strom.

“Hitting smokers with another tax may be the most politically popular solution to the budget impasse, but it sure isn’t fair! The average retail price of a pack of smokes is $3.81 today—adding another $.75 is highway robbery.

“Given that smokers are disproportionately lower-income, this is also one of the most regressive taxes you can raise,” Strom added. (emphasis mine)

The “health impact fee” on cigarettes also opens a can of worms; sugar, corn syrup, trans-fatty acids, saturated fats, and a whole host of other foods are known to have adverse health effects. “What next, a twinkie tax?” asked Strom.
Again,
“Given that smokers are disproportionately lower-income, this is also one of the most regressive taxes you can raise,” Strom added.
Gives new (this time, real) meaning to the trite phrase, "balancing the budget on the backs of the poor," doesn't it? Pawlenty has now jumped with both feet onto the politically-popular cash cow ride via smokers with this proposed user fee tax. Something about this has Bush 41 written all over it.. something about reading lips.

Tim Pawlenty has lots of political capital to spend, but does he really want to spend it on this?

Now I'm no smoker (except for an occasional fine cigar), so in effect I don't have a dog in the fight. But if Pawlenty doesn't figure out a way to wriggle out of this proposal, and do it fast, he's going to have a lot of mud flung his way (and rightly so)smacking of "broken promises" come election time.

***UPDATE**** King Banaian has some insights here.