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edenfallingDisclaimer: I work in a store that sells cigarettes, cigars, rolling tobacco, pipe tobacco, chewing tobacco, snuff, and tobacco-related paraphernalia. Feel free to take my opinions with a grain of salt, because I am talking about something that will directly affect my own job.
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The US goverment decided to raise tobacco taxes recently. Part of that increase (or a separate NY state tax -- PM was not clear on the details, perhaps because we only found out about that raise the day it went into effect, when somebody called the store in the morning and said, "Oh, by the way, tax went up 70 cents; adjust all your cigarette prices accordingly") already kicked in. The main national tax will go into effect on April 1. (Yes, really. I know it's an unfortunate date, but this is not a joke.)
All the tobacco companies are raising prices accordingly, since the coming tax is on bulk tobacco rather than cigarettes; it will affect EVERYTHING. So PM spent all day today calling various companies and trying to figure out what their new prices will be, so we'll only have to adjust prices once instead of first for the tax and then again when we reorder for the first time after the taxes and get socked with the new wholesale prices.
...
Okay, look. I think smoking is stupid and digusting. (I also think that if other people want to be stupid, it's none of my business, so long as they don't blow smoke directly in my face. This is why I don't have a particular moral problem with selling tobacco, especially since everyone now knows it's bad for you.) But. These tax increases seem to be designed to serve two goals. First, raise money to plug holes in budgets. Second, raise cigarette prices so high that people will quit smoking in self-defense.
These are both laudable goals, in the abstract. The thing is, they are (in the long run) mutually exclusive.
If you raise a lot of money, that means people are continuing to smoke. This is good for your budget, which will have the money to fund socially useful programs, but your taxes will disproportionately hit the poorest Americans, which is socially unjust and also stupid. If you succeed in making people quit smoking, you won't raise any money because nobody will sell any cigarettes. That's great for the health care industry (and maybe the snack industry), but it's not good for your budgets, and it's really bad for small local retailers who rely on tobacco sales to prop them up through bad times.
In the short term, you can force some people to quite while still raising a bit more money than before, but you're still imposing an unprogressive sales tax (i.e., it's the same for poor and rich, which means it hits the poor harder), and I suspect that New York, at least, is damn close to the tipping point where new tax increases mean decreased revenue, and the divergence of the two goals becomes apparent. (I believe New York had the highest tobacco taxes in the nation as of last month.) States with lower current taxes have more room to maneuver before that fundamental disconnect becomes clear.
I have the terrible feeling that either nobody in the NY state government realizes these goals are becoming mutually exclusive, or they do realize but are two-faced liars and brought out one set of arguments to convince anti-smoking advocates and a totally different set of arguments to convince budget hawks. I am not sure which possibility annoys me more.
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Here is a NY Times article on the issue from a couple weeks ago, which is more optimistic about making the two tobacco tax goals continue to play nice than I am.
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The US goverment decided to raise tobacco taxes recently. Part of that increase (or a separate NY state tax -- PM was not clear on the details, perhaps because we only found out about that raise the day it went into effect, when somebody called the store in the morning and said, "Oh, by the way, tax went up 70 cents; adjust all your cigarette prices accordingly") already kicked in. The main national tax will go into effect on April 1. (Yes, really. I know it's an unfortunate date, but this is not a joke.)
All the tobacco companies are raising prices accordingly, since the coming tax is on bulk tobacco rather than cigarettes; it will affect EVERYTHING. So PM spent all day today calling various companies and trying to figure out what their new prices will be, so we'll only have to adjust prices once instead of first for the tax and then again when we reorder for the first time after the taxes and get socked with the new wholesale prices.
...
Okay, look. I think smoking is stupid and digusting. (I also think that if other people want to be stupid, it's none of my business, so long as they don't blow smoke directly in my face. This is why I don't have a particular moral problem with selling tobacco, especially since everyone now knows it's bad for you.) But. These tax increases seem to be designed to serve two goals. First, raise money to plug holes in budgets. Second, raise cigarette prices so high that people will quit smoking in self-defense.
These are both laudable goals, in the abstract. The thing is, they are (in the long run) mutually exclusive.
If you raise a lot of money, that means people are continuing to smoke. This is good for your budget, which will have the money to fund socially useful programs, but your taxes will disproportionately hit the poorest Americans, which is socially unjust and also stupid. If you succeed in making people quit smoking, you won't raise any money because nobody will sell any cigarettes. That's great for the health care industry (and maybe the snack industry), but it's not good for your budgets, and it's really bad for small local retailers who rely on tobacco sales to prop them up through bad times.
In the short term, you can force some people to quite while still raising a bit more money than before, but you're still imposing an unprogressive sales tax (i.e., it's the same for poor and rich, which means it hits the poor harder), and I suspect that New York, at least, is damn close to the tipping point where new tax increases mean decreased revenue, and the divergence of the two goals becomes apparent. (I believe New York had the highest tobacco taxes in the nation as of last month.) States with lower current taxes have more room to maneuver before that fundamental disconnect becomes clear.
I have the terrible feeling that either nobody in the NY state government realizes these goals are becoming mutually exclusive, or they do realize but are two-faced liars and brought out one set of arguments to convince anti-smoking advocates and a totally different set of arguments to convince budget hawks. I am not sure which possibility annoys me more.
----------
Here is a NY Times article on the issue from a couple weeks ago, which is more optimistic about making the two tobacco tax goals continue to play nice than I am.
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(no subject)
Date: 2009-03-25 04:29 am (UTC)My money's on option two, but maybe that's because of my rose-colored nostalgia for the combination of intelligence and venality that New York legislators have always been famous for.
We have a tax exactly like that in California; Rob Reiner was one of the big shots behind the campaign for it. The money funds all kinds of great stuff like preschools and mental health services. It doesn't seem to have helped keep California off the verge of bankruptcy, though.
(no subject)
Date: 2009-03-25 05:08 am (UTC)Yeah, the new national tax is to fund SCHIP, which is a laudable beneficiary... but it's nonetheless a very unprogressive tax. Sales taxes in general are unprogressive; I, for one, would much prefer to ditch them altogether in favor of rejiggering income tax rates.
(no subject)
Date: 2009-03-25 06:07 am (UTC)I suggest they legalize recreational marijuana and tax that, which could solve all sorts of problems, budgetary and otherwise. I bet the revenue would be HUEG LIEK XBOX—plus all the money we'd save on prosecuting dealers/users and imprisoning them. I wish someone could figure out if it could fund UHC. XD
(no subject)
Date: 2009-03-25 06:43 am (UTC)Which, okay, if everybody in the world stopped smoking tomorrow, I would be fine with that. Tobacco smoke smells awful, and it's horribly unhealthy. But I do wonder what people think we would do about the subsequent collapse of the tobacco industry and the massive blows to gas stations, convenience stores, small retailers, etc. You cannot just remove a major part of the economy overnight and expect everything to cotinue as if nothing happened.
The thing about legalizing and taxing marijuana... it's so entrenched in the underground now that I'm not sure how easy it would be, logistically speaking, to move that market into the open. Quality control would be nice, of course, but regulations, product testing, branding, marketing, and so on take time.
(no subject)
Date: 2009-03-25 08:58 pm (UTC)(no subject)
Date: 2009-03-25 11:57 pm (UTC)I am not ever saying that tobacco is a good thing. I'm just saying that the tobacco industry is big business, and props up a lot of smaller, mostly unrelated businesses, so strangling it might not be a wise economic move at the moment. :-)