The Hypocrisy of Tobacco Taxation (Or Why The Government Really Wants You To Smoke)

As Congress struggles to pass legislation that will keep SCHIP (State Children’s Health Insurance Program) funded, they once again turn to tobacco taxation as the key. Depending on which bill you look at (House or Senate) the proposed federal tax increase on tobacco would be 45 or 61 cents (per pack of cigarettes).

Tobacco taxation, in its msot current incarnation, is touted as a way to reduce the smoking of tobacco by increasing the price of the product. The theory (and it has been proven to a small extent among some smoking populations) is that if the price of tobacco increases fewer people will smoke, or at least those who smoke will smoke less. In this case, tobacco taxation is being used as a tool to change behavior. But you should ask yourself if the government really wants to have fewer smokers around. I submit that they do not, and the constant attempts to increase tobacco taxes to pay for any myriad of government projects should bear out my stance.

For instance, in the case of SCHIP, the federal government decides that in order to fund the program they need to increase tobacco taxes. Yet, under the behavioral modification theory, the fact that they plan to increase taxes on tobacco should lead to fewer packs of cigarettes being sold, meaning that there would be less tax money to fund SCHIP. In that case, where does the remainder come from? In fact, the government hopes that raising tobacco taxes will not affect most smokers, who are in fact addicted to the substance, and they will just keep smoking and paying the taxes. They know this is what will happen, and they count on smokers keeping right on smoking. They WANT smokers to keep smoking.

But SCHIP isn’t the only thing dependent on tobacco taxation. Aside from health related programs (that are dependent primarily, if not solely, on tobacco taxes) governments use tobacco taxes to swell their general funds accounts, thereby using tobacco money for projects unrelated to health care. When the states sued the tobacco companies and settled for multiple billions of dolalrs, they said that those funds were to be dedicated to health care costs for smoking related diseases. But state governments have repeatedly raided those “windfall funds” and used them for anything from roads to environmenta l impact studies to school building projects and so on. And they rely on smokers to keep those dollars rolling in.

It’s bad enough that tobacco taxation is a regressive tax policy, that is, one that targets those with less overall income disproportio nately. But what makes tobacco taxation policies worse, to me, is the fact that it is a hypocritical policy based on saying one thing while depending on the other. Governments claim to want less smoking, but then they turn around and base programs and policies on a dependence to tobacco taxes.

How does this even make sense? It doesn’t, and everyone knows it doesn’t.

And when you consider the fact that government rules and regulations are constantly limiting the places where people can smoke, you have to wonder where all these smokers are going to go to continue to light up so that the governments can continue to collect the taxes that they rely on.

Smoking is a bad health choice. That much has been proven pretty conclusively . But instead of trying to ban smoking (as the government does with much less harmful drugs like marijuana) the government takes a two-faced approach- don’t smoke, but if you do, smoke over there in the street; and please smoke because we want your money to pay for these programs.

One wonders if the government really even cares about the programs they seek to fund with tobacco taxes. If they were indeed intent on taxing tobacco out of existence, they’d surely not tie that revenue to programs that enjoy wide support, like children’s health insurance. Unless they want the program to die a slow, smoker-like death.

How can anyone support the current dichotomy of tobacco taxation? It is a policy riddled with contradictio n and hypocrisy. I think legislators simply have too much smoke in their eyes to see the absurdity of their actions. Maybe we should apply a tax to bad governance instead.

(cross posted at Bring It On!)