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States hooked on tobacco tax
Charlotte Observer ^ | Sun, Sep. 29, 2002 | GEORGE WILL

Posted on 09/30/2002 6:47:22 PM PDT by Between the Lines

Many have big interest in preserving a large number of smokers

GEORGE WILL

Washington Post Writers Group

WASHINGTON - Let us stipulate that the world would be better without cigarettes. But steadily accumulating evidence indicates that many government tobacco policies, purportedly designed to discourage smoking but not too much, are bizarre.

In the 1990s, states sued tobacco companies, ostensibly to recoup costs to them of their residents' smoking. Put plainly, which is not how states like to have it put, the primary aim was to recoup the cost of treating illnesses related to the legal use of a legal product universally known to pose health hazards. However, smoking may be self-financing, perhaps even a net financial gain to government. Cigarettes are the most heavily taxed consumer product, and one in three smokers dies prematurely, before collecting pensions and medical entitlements they would have received had they lived longer.

There are two other rickety premises on which the argument for extracting $246 billion from tobacco companies rests. One is that tobacco is so addictive that stopping is not an option. The other is that people are unaware -- because of industry disinformation -- that smoking is hazardous. However, about as many Americans are former smokers as are smokers. And W. Kip Viscusi of Harvard Law School cites survey data showing that smokers substantially overestimate smoking's dangers. They say, for example, that more than 40 percent of smokers will get lung cancer, whereas only about 15 percent do.

Oregon has just become the 19th state this year to raise cigarette taxes, which now range from Virginia's 2.5 cents per pack to New York's $1.50. New York City's Mayor Michael Bloomberg has raised the city tax from eight cents to $1.50, so a typical pack bought in the city costs $7.50.

Studies suggest that a 10 percent tax increase produces a 5 percent decrease in smoking, and that cigarette taxes are not as regressive as they seem because poorer smokers are especially apt to respond to tax increases by quitting smoking.

Bloomberg hopes this dynamic will make the revenue from the city's cigarette taxes negligible. But there may be another reason why revenues will be small. Jacob Sullum, author of "For Your Own Good: The Anti-Smoking Crusade and the Tyranny of Public Health," notes that smokers have alternatives to paying Bloomberg's taxes. They can buy cigarettes in the suburbs or online (a $7.50 pack for $2.70) or from smugglers. In 2000 the FBI arrested 18 people accused of smuggling cigarettes from North Carolina (state tax: 5 cents a pack). They allegedly were raising money for the terrorist organization Hezbollah.

With states facing their worst budget problems in a decade, many are becoming as addicted to cigarette tax revenues as some smokers are to cigarettes. These states have a large interest in preserving a large number of smokers. The 1998 agreements between tobacco companies, state attorneys general and trial lawyers will pay out the $246 billion over 25 years, and states are supposed to use significant portions of their proceeds to discourage smoking. However, some states are selling all or portions of their future payments at a discount to investors and applying their reduced settlements to, well ...

About 5 percent paid out so far has gone to anti-smoking measures. New York has spent some settlement money on a sprinkler system for an upstate golf course. Alabama has used some money to discourage satanic worship in public schools. Nevada is using some money to convert its public television stations to digital broadcasting. North Carolina has devoted almost three-fourths of its money to measures for the production and marketing of ... tobacco.

George

Will


TOPICS: Business/Economy; Culture/Society; Government; Miscellaneous
KEYWORDS: smoking; tobacco

1 posted on 09/30/2002 6:47:22 PM PDT by Between the Lines
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2 posted on 09/30/2002 7:12:10 PM PDT by terilyn
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To: Between the Lines
They don't even use the windfall in a productive way.
3 posted on 09/30/2002 8:08:42 PM PDT by Great Dane
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