Monday, April 6, 2009

Smoking taxes set fire under budget reformation

Bkuffton Today

We had a pretty busy week, as there was a lot of interest in some of the bills coming forward, primarily the tobacco tax. In fact, we had well over 600 constituent contacts for the week.

Fortunately, the email problem with the web site has been corrected. A fair portion of our contacts are via the web site, which gives us a little flexibility in handling the traffic. Nonetheless, the legislative staff did a superb job in making sure that everyone’s issues were properly addressed, calls and emails were returned, and the mail was answered.

With regard to the cigarette tax, I think some explanation is warranted. This is a measure that has been in the works for some time and nearly everyone in the legislature has been in varying stages of agreement with its necessity for years. Unfortunately, it has been the subject of posturing and positioning on other issues, with the result being that the budgetary crisis finally pushed us into doing what we knew was the right thing all along.

In my view, the cigarette tax is about as close to a user fee as we can get. Ideally, the tax on cigarettes should be used to mitigate the harm done to society by the use of the product. The health effects of tobacco use are no longer controversial. The costs to the state in terms of our Medicaid match alone are driven in part by the effects of smoking. It is reasonable that smokers assume a portion of those costs.

One of the interesting features of a cigarette tax is that it usually drives down the percentage of smokers in the population, mostly by financially discouraging young folks from starting to smoke. Even though our projected tax is comparatively modest, there will be a decrease in smoking that will ultimately reduce our health care costs as we go forward.

The experience in Canada as they began a program of escalating tobacco taxes, was that the health effect was so dramatic that they had to rewrite their actuarial tables because the average person started living appreciably longer. We will never, of course, raise our level of taxation anywhere close to Canada’s, but the relationship between the tax and usage is informative.

One of the things we will notice is that, over time, we will collect fewer tobacco tax dollars because of the drop off in smoking. As a member of the budget-writing Ways and Means Committee, I will be vigilant in making certain we anticipate that decrease as we prepare our spending plan. In truth, this downturn has had the effect of forcing a degree of rationality on our taxation structure.

Paradoxically, by having to use non-recurring dollars for recurring obligations, as well as a host of other makeshift budgetary techniques, there is much more serious conversation about real reform of the process. My concern is that we will organize a study group and study the problem for years, then put the study on the shelf with all the other studies and never get to the implementation stage. Does that sound familiar?


Regardless, I will continue, on your behalf, to push for fair and modest taxation, coupled with prudent and reasonable spending-- cutting where we can, increasing where we must-- until our budgetary process resembles an efficient and productive service delivery machine. Someday.

For now, state financial restraints dictate a two-week furlough for the legislature. I’ll still be working for you, we just won’t be on the clock.