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Lawmakers turn their heads to smokers for filling budget holesHefty taxes on cigarettes and other tobacco products reduce smokers’ rates and help in improving public health. However, on the other hand, the hit the low-income Americans the most, since it is proven that deprived low-income people smoke two times more than the average Americans. This is the major dilemma of the latest increase in the federal cigarette tax that saw cigarette prices rising by 62 cents. After this tax, which by the way would go down into history as the largest cigarette tax hike, comes into effect, the nation’s average pack of cigarettes would cost $4.80 – $3.20 just in taxes. The most ironic thing in that tax story is that wealthier smokers, who prefer large cigars will not deal with any price increases, since large cigars were not taxed as much as cigarettes. Certainly, congress led by president Obama, who has been desperate to give up smoking himself would have to deal with many difficulties while attempting to fund national health program for children. Those difficulties include but are not limited to possible loss of revenues and even conflicts between law authorities and those smokers who resort to tax-exempted Indian smoke shops, visit overseas online shops or even use black market to satisfy their tobacco cravings. However, there is one thing that distinguishes the latest tax increase from all previous ones, it is that the not a dollar from this 156-percent increase would be used to fund health programs related directly to smokers in order to help them kick their habit down. Moreover, many states close such programs in order to redirect money to more important issues. It definitely depends on how you look at that tax: if you consider the increase as a nice way to collect revenue, it is your choice. But you can also look at the reverse side of the coin, trying to at least understand that the poorest segments of american population would be hit by such regressive tax like tobacco tax the most. Tax supporters claim that according to their estimations, around 1 million of adult population will give up after the tax increase. In addition, almost 2 million young americans are not likely to start smoking or at least try cigarette. And millions would certainly cut the number of smoked cigarettes. The majority of the states are debating over tobacco tax increase that would successfully cover holes in the budget. The state Rhode Island, for instance, recently approved the bill to increase taxes by $1 per pack, making the state top the list of the highest tobacco taxes in the nation with the total taxes per pack reaching $3.46 in providence. Even South Carolina being home to the nation’s lowest tobacco tax – 7 cents per pack – is one step from approving a 50-cent increase, with a corresponding proposal recently passed South Carolina House of Representatives. Researches regarding previous tax hikes have concluded that cigarette sales drop significantly straight after the tax increase entering into effect but slowly got back after a while. However, the studies also showed that the number of smokers across the nation was decreased by 3 percent in comparison to last year. And the price increase is the major factor influencing on that decline, as the Center for Disease Control and Prevention in Minneapolis reported. According to statistics, the nation saw almost 80 tobacco tax hikes in 45 states during the past decade. "The majority of federal and state lawmakers consider tax increase a win-win-win strategy," states Derrick Moms, Action on Smoking and Health (ASH) manager. "It is first of all a win for public health, then it is a win for state and federal budget, and finally it is a win in order to keep up with the voters." Meanwhile, tax opponents claim that applying tax policy in order to dictate the will of the majority to even a small group of American smokers violates the fundamental concept of self-determination and freedom of choice. "This seems to be a kind of tyranny or despotism when the majority is tormenting and chasing an unpopular and already deprived minority, therefore, Americans, who certainly know what is a struggle for freedom, have to think about it," admits Cynthia Durant from The Institute on Taxation and Economic Policy. "We are experiencing the retributive taxation imposed by the government that could lead to grievous consequences." One of such consequences includes the loss of revenue, which can be lower than it was earlier expected because many smokers would rather resort to other means of getting smokes, like Indian reservations, or online tobacco shops in order to thwart government’s plans. That brings a major concern for Florida lawmakers trying to pass a $1 hike in state tobacco taxes. Legislators even proposed to label tax-free cigarettes distributed on Indian tribal lands as "Indian tobacco stamp" and make it a first class misdemeanor for a non-Indian to buy them. The visitors of Atlanta based Cigar Club have been actively debating over tax increases and broken promises of new administration. Some say that in case revenue would be used to finance children health insurances, they should have imposed taxes on Pampers, instead of taxing smokers. It is a kind of hypocrisy to fund a health care program from industry the government is willing to close. And who knows, what would happen when the smokers would give up their habit, would they still wait for that money to pass to their pockets? |
