WINSTON-SALEM, N.C. – President Obama’s proposal to nearly double the federal excise tax on tobacco products from $1.01 to $1.95 per pack would be too dependent on an unstable and decreasing source of revenue, according to the Tax Foundation.
The Winston-Salem Journal reports that Obama, who in his State of the Union speech said funding for pre-kindergarten education programs is a priority, has said he would use the added cigarette tax revenue, as well as tax increases on other tobacco products, to help states make available free pre-K education. In sum, the proposed tobacco tax increases would raise $78.1 billion over 10 years, according to the U.S. Office of Management and Budget.
Meanwhile, Tax Foundation researchers say that raising federal tobacco excise taxes alone wouldn’t be sustainable enough to achieve Obama’s goal because smoking rates are declining.
"If taxpayers want to pursue universal preschool programs, we must do so using broad-based revenue sources which don’t rely on a small, diminishing portion of the population to pay a disproportionate share of the costs,” Tax Foundation economist Scott Drenkard told the news source.
Peter Hamm, a spokesman with the Campaign for Tobacco-Free Kids, said Tax Foundation researchers are wrong: "Organizations highly respected by Congress, including the Congressional Budget Office and the Center on Budget and Policy Priorities have found that increasing the tobacco tax is a reliable source of revenue,” Hamm told the newspaper, adding, “This is an old tobacco industry myth that has been disproven time and time again.”
Meanwhile, support from Congress to move forward with a tobacco tax increase appears limited — depending on who you ask.
Hamm says there’s “aggressive campaigns on-going to convince Congress to enact the proposal,” notes the news source.
Ericka Perryman, press secretary for U.S. Rep. Virginia Foxx (R-NC), commented that the Senate, through its own budget proposal, “dismissed the president’s recommendation to increase the tobacco excise tax. The House budget does not increase that specific tax or any other, for that matter.”
Sadie Weiner, a spokeswoman for U.S. Sen. Kay Hagan (R-NC), told the news source that although the congresswoman is supportive of expanding early childhood education initiatives, “doubling the tobacco tax would hurt farmers and the economy in North Carolina, and is not the appropriate way to fund new programs.”
John Hood, president of the conservative policy research group John Locke Foundation, believes that that basing state expansion of preschool on higher federal cigarette taxes “is an ill-advised policy on many levels.”
"There is no logical relationship between tobacco use and education policy, and giving states temporary federal funding for a permanent increase in spending is the kind of policy that always turns out badly in the long run,” Hood told the news source.
The Tax Foundation concludes: “If taxpayers choose to pursue universal preschool programs, we should be willing to pay for them with real, broad-based taxes. Failure to do so promotes a tax system that leans on a small portion of the population to pay a disproportionate share of government services.”