August 6, 2007 - 12:20pm
Say No to Tobacco Tax
By Steve LoneganSome U.S. Senators want to pass a huge cigarette tax hike to finance expansion of a government-run socialized health insurance program. The bill would increase the federal cigarette tax from .39 to $1.00 per pack and the cigar tax from 4.8 cents to an astounding 53% up to $10.00 per cigar.
The Senate Finance Committee will be marking up a bill this week to expand the State Children’s Health Insurance (SCHIP) program, a program started by President Clinton to provide government-run health insurance for low-income children who are not poor enough to qualify for Medicaid. Whatever the merits of SCHIP, its expansion should not be financed by hiking the regressive federal cigarette excise tax.
Excise taxes are bad policy. To minimize economic distortions, taxes should have a broad base and a low rate. Excise taxes are the worst departure from this principal, singling out specific products for excessive taxation, substituting coercive government power for free market pricing.
The cigarette excise tax is highly regressive, consistently borne by low-income Americans. A recent Tax Foundation study found that the burden of the existing federal cigarette excise tax is 7.5 times greater on the bottom income quintile than on the top. Increasing the tax would therefore undermine the purpose of an SCHIP expansion, because the tax would fall largely on the very families the expansion is intended to benefit. If the tax is used to finance expansion of the program to higher income families, the end-result would be to tax the poor to pay for government-run health benefits for lower-middle or even middle class. That’s wrong.
The cigarette excise tax also has contradictory purposes—while one stated goal is to discourage smoking, the tax also makes the government reliant on revenue from smokers—in this case for funding SCHIP. The tax is an unreliable revenue source, both because smoking is in general decline and because higher taxes tend to reduce sales.
Finally, there are limits to the enforceability of cigarette tax increases. Cigarette smuggling has dramatically increased in recent years and small smuggling operations are being supplanted by highly sophisticated organized crime syndicates.
For these reasons, Senators Menendez and Lautenberg should oppose any increase in the federal cigarette excise tax.
Steve Lonegan is the Mayor of Bogota, NJ, and Executive Director of Americans for Prosperity - New Jersey. Americans for Prosperity (AFP) and Americans for Prosperity Foundation (AFP Foundation) are committed to educating citizens about economic policy and mobilizing those citizens as advocates in the public policy process. He is a prolific writer, having been published in newspapers and blogs. He currently has a book in pre-publication on the impact of New Jersey state government on the well being of the taxpayers of the state, where he offers solid and workable solutions.
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Huh?
"the cigar tax from 4.8 cents to an astounding 53% up to $10.00 per cigar."
Obviously Steve's thought this out long and hard to produce such clear writing on it.
After all, it is better to have people smoking cheap tobacco than to have kids with health care.
Never saw a tax a Democrat didn't like
I agree with Steve on this one. NO ONE is saying we don't care about kids. The SCHIP program has plenty of funding, but it may need more. The Bush tax cuts have help create a great economy pay down the debt, yet Democrats insist on increasing YET AGAIN a tax on a legal product and, in my opinion, to politicize the issue they tie this tax increase to "kids". Steve is right in that I, and many people like me, leave the state to purchase LEGAL tobacco products because Democrats at the State level have already made the price of cigarettes and cigars too expensive, even though they depend on this money for their coffers. Give it a rest FormerlyAnonymous and see through the spin on this issue.
This is for CHILDREN's HEALTH INSURANCE Steve!
We can't raise TOBACCO taxes to pay for children's health? Huh? This column is a rewrite of an R.J. Reynolds press release and seems in coordination with Reynolds "Astroturf" Fake Grassroots Campaign, see: http://www.nocigtax.com/ Right wingers have no shame!
Common Sense
With apologies to Thomas Paine, of course. Mr Lonegan makes the point better than I've ever seen from anyone, in the third paragraph. Have many sources with broad bases instead of soaking and socking any one source. When will this idea dawn upon more of our lawmakers in setting tax policy?
Liberals squandered the settlement $$$
Here we go again.!!! on the road to nowhere except ruin. Everything done in the name of the Kids. Well listen up after all the money is gone and squandered on the Government fat cats there will be nothing left for the KIDS. When Joe and Jane sixpack have no jobs to go to because liberals have driven their employers out of business, this Republic will cease to be the land of Liberty. We a nearly there and the Chinese are laughing all the way to work in their cigarette factories.
Will they be able to laugh??
With lung cancer? It would be more of a gurgle and spit...
Funeral costs
At least they can afford to die. Unlike NJ where they tax you after taking your business, Home and after you die. Just to find out that the little money you left for the Kids.... they took that too.
To hell with Progressive Socialists
i
NO MORE TAXES--PERIOD.
Don't have to worry about dying from tobacco or second hand smoke. The taxes will kill us first.
Say No to Tobacco Tax? Is that you, Joe Camel?
Why do you feel the tax has contradictory purposes? It has an important public health goal of reducing the burden our citizens bearr from tobacco related death and disease. It also has the goal of funding SCHIP. Worrying that smoking prevalence in NJ will drop so much that it becomes difficult to fund SCHIP is jumping the gun a bit, don't you think?
Lastly, not supporting an initiative that can have a tremendously beneficial public health effect because you're worried about a few people getting around the tax is just short-sighted.
Where Does it End?
Okay misphd. Let's also add a tax to alcohol, speeding tickets, motorcycles, long commutes, seat belt tickets, drug indictments, malpractice suits, weapons, DWIs, etc. There would be enough money in health & injury related sin taxes, and lifestyles to pay off the debt and supply children and adults with needed health care. Let's go for it.
Tobacco tax
Well here they go again. Steve is absolutely correct on this one, and if they get this through look out for more.
New jersey already takes over $2.50 tobacco tax per pack on cigarettes, and then charges sales tax on top of that! Maybe the feds feel they can get in on this game as well.
I smoke a cigar here and there, and I feel that those that smoke are being targeted because the majority feels it is a bad habit and we should pay, so they ignore the fact that we are being targeted.
Well maybe I feel more patriotic because I smoke a little and drink a beer now and then...after all I pay more taxes than someone who drinks water or is hooked on fatty junk foods....maybe there should be a tax on cheeseburgers and potato chips.
Hey misphd...what happened to the money from the big tobacco lawsuits?, it was supposed to help those who were suffering from health issues caused by tobacco. The only ones on the good end of that deal were the lawyers (Whats 30% of 100 billion?), and our state took our share and squandered it putting it into the general fund.
This is just another money grab playing on your sympathies, and it will affect you because it will affect the cost of doing business which will be put on the consumer whether you smoke or not.
I have said this before and I will say it again....Socialist ideals don't belong in a democratic society, especially designed as programs to help one group and leech off another.
Good public health policy
Tobacco excise taxes are part of an effective public health effort to reduce the harm caused by smoking. I understand the desire to keep taxes low and I am definitely frustrated that more money from excise taxes and the Master Settlement agreement hasn't gone to effective tobacco control efforts in NJ. "Where does it end?" and "Here they go again" are weak arguments, however.
New Jersey DOES however fund the New Jersey Comprehensive Tobacco Control Program (though it is grossly underfunded). More of this money needs to go to the CTCP where effective tobacco control efforts can be supported. See http://www.state.nj.us/health/as/ctcp/
The D's First Step to Universal Healthcare
This SCHIP bill is the Dems first step towards implementing universal healthcare... during the debate over Hillary-care it came up that the D's could use children's healthcare to lay the groundwork. Whatever your position on tabacco taxes are - it's all in the fine print... this isn't just a reauthorization...
Taxing cigarettes isn't
Taxing cigarettes isn't going to make the government that much more money and continuing to add taxes isn't going to improve government / citizen relationships. The drug war hasn't kept drugs out of the country, and people in drug rehab haven't stopped using. Laws didn't keep them from using either and if anyone thinks taxing cigarettes is going to keep people from smoking think again. Your better off improving the economy to get more money, get more people to work and spend then taxing us.
oops
sorry, this posted twice.
Cigarettes and Free Health!
I think that northjerseykid is right. This is the first step towards universal healthcare which I am strongly supportive of. Having to live on a daily basis without healthcare I worry constantly, which is probably even worse for my health. As well as my cousin who was put into an alcohol treatment center, this would really help. Maybe it wouldn't pay for everything but it would definitely help. On the other hand, taxing cigarettes? You might as well.