Smart tactic: Tax tobacco

Discussions regarding revenue in the state of Louisiana are met with deep suspicion by legislators and statewide officials fearing retribution from voters. While the prospect of higher taxes intimidates any voter, legislators and governors are wary, rightfully so, about the impact of tax policies upon attempts to attract future businesses and residents.

Nonetheless, I have a proposal that the Louisiana legislature should adopt that will increase revenues, decrease non-discretionary state expenditures, decrease the number of cuts to state services, and increase the quality of life for Louisianans — increase the tobacco tax.

Non-smokers in Louisiana pay a “hidden tax” on the tobacco usage of other Louisianans. About 23.5 percent of Louisianans smoke, which is the 11th-highest smoking rate in the nation. Louisianans spend $1.4 billion per year in smoking-related medical costs; the state of Louisiana spends $663 million per year in smoking-related Medicaid costs.

Smoking imposes a “hidden tax” of $197.86 per person per year on Louisianans. Each pack of cigarettes costs Louisiana $1.72 in Medicaid spending; each pack of cigarettes sold in Louisiana imposes an additional charge of $3.83 being spent on health care.

Tobacco usage places an undue tax burden upon non-smokers in Louisiana. Tobacco taxes would decrease the hidden taxes paid by non-smokers.

Tobacco taxes are popular. Public opinion polls demonstrate voters, whether smokers or non-smokers, support tobacco taxes.

The tobacco tax is supported by low-income voters and high-income voters, Democratic and Republicans.

In 61 polls conducted across 39 states, majorities of Democrats, Republicans and Independents expressed support for increasing tobacco taxes and a preference for candidates who support an increase in tobacco taxes over candidates who oppose them. In Tennessee, 38 percent of Republicans said they would support a Democrat who supports a tobacco tax over a Republican who opposes a tobacco tax.

Even in tobacco-dependent South Carolina, 71 percent of the voters expressed support for a $1 increase in their tobacco tax. Voters do not support cuts to education or health care in order to balance the budget. Tobacco taxes are popular with voters; voters will punish candidates who oppose tobacco taxes.

Tobacco taxes are supported by Republicans. Last year, Florida ($1), Hawaii (60 cents) and Mississippi (50 cents) approved tobacco tax increases. Tobacco taxes were signed into law by Republican Gov. Haley Barbour of Mississippi, which raised its tobacco tax for the first time since 1985. Barbour remains as popular as ever and is even being mentioned as a possible Republican presidential candidate in 2012. Arizona, Colorado, Montana, Oklahoma, and South Dakota all increased their tobacco tax in recent years.

Tobacco taxes are not as regressive as other sales taxes. Studies show tobacco tax increases cause more low-income smokers than high-income smokers to quit. Tobacco taxes increase revenue, reduce Medicaid expenditures and lead to smoking cessation. Tobacco taxes behave like tax cuts because individuals who stop smoking pay less in taxes and have more money to spend on other goods and services.

The tobacco tax in Louisiana is embarrassingly low. The average state cigarette tax is $1.27 per pack; however, in Louisiana the state cigarette tax is 36 cents per pack, 8 percent for cigars, 33 percent for smoking tobacco, and 20 percent for new-styles-of-famous-smokeless-tobacco-product.

Louisiana ranks 46th out of 50th. Louisiana could increase the cigarette tax by 90 cents and still fall below the national average.

Louisiana should increase the cigarette tax to match the national average and increase the tax rate assessed on cigars, smoking tobacco and smokeless tobacco by 10 percent. This would generate more than $300 million per year for the state of Louisiana; the state could do a lot with an extra $300 million. This figure does not include the savings created by decreasing smoking-related Medicaid costs.

Tobacco taxes are smart politics. Tobacco taxes are healthy politics. Tobacco taxes are right politics. I am perplexed why the governor doesn’t see this.

Dr. Joshua Stockley is a professor of political science at ULM. This column is taken from his recent commentary, “Tobacco & Fat: How More Taxes Can Be Smart Politics,” written for the Louisiana Progress Journal produced by the Louisiana Progress Initiative.

One response to “Smart tactic: Tax tobacco

  1. With all due respect professor, maybe you would be less perplexed if you spent more time outside of the classroom in the real world. Just because something may seem popular doesn’t make it a good idea. Raise tobacco taxes and smokers will go find cheaper smokes elsewhere. That is exactly what happened in D.C.

    “The estimate for cigarette tax revenue [in D.C.] is revised downwards by $15.4 million in [fiscal year] 2010 and $15.2 million in [fiscal year] 2011.”

    Besides, if raising tobacco taxes results in all these wonderful things you claim, than how do you explain black market growth wherever tobacco taxes are too high?

    Smokers are already taxes beyond reason when compared to other vices – enough to cover the guesstimated costs to the public. If you try to use the “burden to the public” excuse to justify higher taxation, than you’ll be able to justify any sort of tax increase that will make citizens into slaves.

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