WASHINGTON – Why is
increasing the tobacco taxes to fund more preschool education a bad idea?
Writer Jacob Grier outlines four reasons in The Atlantic:
1. Tobacco
taxes are regressive. The
financial burden of higher tobacco taxes will hurt those with lower incomes the
most. “A widely reported study of American smokers surveyed from 2010 to 2011
found that smokers making less than $30,000 per year spend 14% of their income
on cigarettes. In New York, home to the highest cigarette taxes in the country,
cigarettes consume nearly a quarter of their income. By comparison, smokers
earning more than $60,000 per year spend just 2% of their income on
cigarettes,” Grier pointed out. The president’s budget would raise the federal
tax on cigarettes to $1.95 per pack, nearly double its current $1.01 per pack.
2. Smokers
already pay their way. Those who
use tobacco pay more in excise taxes and also receive fewer services as they
grow older because they usually, well, die younger. “Research at the time of
the Master Settlement Agreement showed that smokers were already covering at
least a significant portion of their external costs, and tobacco taxes have
gone up substantially since then,” wrote Grier.
3. Pipes and
cigars are already under threat.
Obama’s proposal would close the gap between cigarette taxes and taxes on other
tobacco products. “The new taxes proposed by Obama would increase rates for
cigars and end the disparity between pipe tobacco and roll-your-own by taxing
both products at a high rate. But at what cost? The premium tobacco business is
already beleaguered by ever more expansive smoking bans, state and local taxes,
and the looming threat of costly and inefficient regulation by the FDA. It's a
safe bet that Marlboro will still be around a few years from now, but premium
cigars and pipe blends may not fare nearly as well,” Grier said.
4. Broadly
beneficial programs should be funded by broadly imposed taxes. While the president’s suggestion is politically
correct, it’s not the right thing to do. “According to the Centers for Disease
Control, states will collect $25.7 billion from tobacco taxes and legal
settlements this year. Less than 2% of this will go toward tobacco-control
programs,” wrote Grier.
NACS is reviewing the president’s budget and will provide an
analysis should his plan come before Congress for a vote.