Home subscribe manage Las Vegas Review-Journal
  Jobs Cars Homes Shopping Travel Weddings Golf Best of Las Vegas Photo   Search:

RECENT EDITIONS
Thu Fri Sat Sun Mon Tue Wed

Opinion
Oct. 02, 2007
Copyright © Las Vegas Review-Journal

EDITORIAL: A fiscal smokescreen

The withdrawal symptoms are unmistakable: dry mouth, headaches, anxiety, irritability. Cigarette taxes are addictive, and if spendthrift lawmakers don't get a handle on their nasty habit soon, no patch or chewing gum will save them from the pain of going cold turkey.

States have been boosting their per-pack tax rates for years while simultaneously prohibiting smoking in more and more public and private spaces. Now Congress wants to expand the State Children's Health Insurance Program on the lungs of smokers by increasing the federal cigarette tax 156 percent, to $1 per pack.

Newsvine Digg Fark Technorati reddit StumbleUpon del.icio.us Slashdot Propeller Mixx Furl Twitter MySpace Facebook Google Bookmarks Yahoo! Bookmarks Windows Live Favorites Ask MyStuff myAOL Favorites

Most Popular Stories
  • LETTERS: Tight-fisted casinos need to loosen up
  • LETTERS: Professor needs to get with the program
  • LETTERS: Trickle-down economics is dead
  • EDITORIAL: Tip jar
  • FROM OUR READERS: We can't do worse than country's current leadership
  • VIN SUPRYNOWICZ: Shall we save the economy ... or the government?
  • EDITORIAL: A tiny bit of good news?
  • EDITORIAL: Cut spending during lean times
  • LETTERS: Don't expect district to cut waste
  • EDITORIAL: Sending the right message



    • Majority Democrats, joined by many minority Republicans, are counting on that tax hike to generate about $35 billion over the next five years. That funding would then subsidize medical insurance for more middle-class children.

    At the same time, many lawmakers have expressed hope that the legislation will encourage more people to stop smoking. But if that happens, they won't have enough money to keep the program afloat. Rep. Jack Kingston, R-Ga., told his colleagues during House debate that "in order to get enough money to pay for this, it would require 22 million new smokers."

    But that's not going to happen if this bill becomes law. Consumers don't rush to purchase goods when prices go up. And they're especially adept at modifying their spending to avoid tax increases.

    For proof of that, Congress should look north, to New Jersey. After that state's legislature raised cigarette taxes for the fourth time in six years, to a nation-leading $2.571/2 per pack, cigarette tax revenues declined, from $787 million in fiscal year 2006 to $764 million in fiscal 2007.

    New Jersey residents hadn't cut back on smoking. Rather, more people started buying smokes online, in states with much lower per-pack taxes (cigarette sales in neighboring Delaware are up), or through a burgeoning black market. When a state such as South Carolina levies a tax of only 7 cents per pack, it creates a tempting business opportunity for would-be smugglers.

    Although the children's health insurance bill would extend the program for five years, federal budgeting rules require lawmakers to account for 10 years of costs. Lawmakers know their tax increase will result in diminishing returns between 2013 and 2017, so they've conveniently proposed reduced spending during that period.

    Yes, Congress expects taxpayers to believe that after passing a massive program expansion, just five years from now they'll authorize a massive program cut. More likely, once cigarette tax revenues are finally snuffed out, they'll have license to squeeze every last dime out of another unsympathetic habit -- maybe even yours.

    This is a fraudulent, front-loaded funding scheme that tries to ignore the social and economic consequences of poor tax policy.



    Leave Your Comment 11 Reader Comments
    Terms & Conditions
    The following comments are provided by readers and are the sole responsiblity of the authors. The reviewjournal.com does not review comments before publication nor guarantee their accuracy. By publishing a comment here you agree to abide by the comment policy. If you see a comment that violates the policy, please notify the web editor.

    Some comments may not display immediately due to an automatic filter. These comments will be reviewed within 48 hours. Please do not submit a comment more than once.
    Current Word Count:

    Whiskey Tango Foxtrot wrote on October 02, 2007 07:52 PM: Patte makes a good point. When Kenny Guinn created the Millienium Scholarship out of the tobacco settlement money, he promised that NO taxpayer money would ever be used to bail it out. Yet, one of the LAST things he did was sign over taxpayer money to bail it out. The same thing will happen with the funding for the SCHIP program.


    Steve wrote on October 02, 2007 07:00 PM: John F: Well said.


    Ken Brown wrote on October 02, 2007 12:41 PM: Sin tax? I like that. How about an abortion tax to help out middle class children. What hair brained idea will my conservitive brothers think of next.


    jakzen wrote on October 02, 2007 12:11 PM: This is one of the safest taxes for them to increase. Statistics show that approximately 19% of Americans smoke. We actually rate among the lowest percentages among industrialized nations. While I don't like additional taxes, especially for those who cannot afford them, this program is vital. Those of us who have health insurance end up paying more for our coverage so the hospitals and other care providers can recoup some of the costs of caring for the uninsured. This is a situation where its pay me now or pay me later. Like others, I believe that increasing the Cigarette tax isnt the best way to fund this program.


    patte wrote on October 02, 2007 11:00 AM: We need only look at the Millenium

    Scolarhip boondoggle created by Kenny Guinn. Despite the promise that this would come from cigarette lawsuit proceeds, it has cost the taxpayers 10's of millions of dollars to build all the extra colleges to house these

    "brilliant" recipients. Now that the

    lawsuit proceeds have declined they have tapped gift certificate proceeds and other tax sources to keep it solvent. Once a benefit is in place, you will never get rid of it. ie. farm

    subsidies.


    patte wrote on October 02, 2007 10:59 AM: We need only look at the Millenium
    Scolarhip boondoggle created by Kenny Guinn. Despite the promise that this would come from cigarette lawsuit proceeds, it has cost the taxpayers 10's of millions of dollars to build all the extra colleges to house these
    "brilliant" recipients. Now that the
    lawsuit proceeds have declined they have tapped gift certificate proceeds and other tax sources to keep it solvent. Once a benefit is in place, you will never get rid of it. ie. farm
    subsidies.


    John F wrote on October 02, 2007 09:24 AM: WTF makes a very valid point. We tax cigarettes to discourage consumption, but then count on the revenue to pay for programs. Not at all logical. SCHIP is a very good program; funding it in this fashion is a recipe for disaster.

    Matk,
    Taxation is immoral? Not in and of itself. I agree with you that how we spend those taxes could very well be immoral and how we have set up our current tax system is immoral in a lot of ways. But taxation is not inherently immoral.

    If we grant that there are some things we as a nation must pony up for collectively, then taxes are a necessary evil. Certainly national defense is something we all need to pay for, as are highways. There exists a lot of disagreement about whether we should spend money on other things, but there are some things we need taxes for.

    That being the case, we should raise taxes for that purpose only. Taxation should not be used to reward or punish certain behaviors. I'm probably the only liberal on the face of the earth who will say this, but this is why we need a flat tax with no deductions. Everyone should pay in equal measure. If I make ten times as much as you do I should pay ten times as much in taxes. Period. That way we share the burden equally and we don't put the government in the position of dictating our behavior. Government exists to secure our G-d given rights and the blessings of liberty for all citizens. Our current tax system makes a mockery of this notion.


    Timinator wrote on October 02, 2007 08:02 AM: All taxes are used to influence behavior, including the byzantine federal income tax.


    Mark wrote on October 02, 2007 06:39 AM: When the people find that they can vote themselves money, that will herald the end of the republic. — Benjamin Franklin
    Taxation is immoral. The politicians are out of control with greed for our money.


    John wrote on October 02, 2007 04:59 AM: I agree our tax policy is poorly designed. The tax code should not be used to influence behavior, it should be used to raise revenue. All sin taxes should be abolished and replaced with increases in individual income taxes.

    Eliminating smoking is a laudible policy but it should not be implemented by the tax code. Education and limitations on where smoking is permitted should be the mechanism to accomplish that goal.


    Read All Comments