New Study Exposes the Truth About Tobacco Taxes

David Williams

September 28, 2012

The New York State Department of Health recently released a study that raised a lot of eyebrows, and perhaps the results of the study will lead elected officials to implement policies that help rather than punish the people.  The study found that in New York cigarette taxes harm the poorest among us most.  Although the study did not examine the effects of such taxes beyond New York state, cigarette taxes have the same effects on the poor no matter what part of the nation we’re looking at.

The Daily Caller reported that “Low-income smokers [in New York state]… spent an average of 23.6 percent of their annual household income on cigarettes.”  Interestingly enough as the article also points out, “That number is up…in spite of increasing cigarette taxes imposed by the state and city governments.”  These findings fortify facts that the Taxpayers Protection Alliance and others have been saying for quite some time.  Plain and simple: excise taxes such as those on cigarettes, alcohol and soda harm the poor by taking more from their pocketbooks.

Furthermore despite additional tax increases on cigarettes throughout the years, the state-funded study found that there has been no decline in the amount of low-income smokers, meaning that the poor continue to bear the greatest brunt of the tax.  When implementing these taxes policy makers intended to modify people’s behavior through such policies by employing the logic that higher taxes would lead to fewer purchases.  For neither the first nor the last time, they were wrong. The results of this study offer more examples of how government’s intentions to help the poor actually have the opposite effect.

Additionally, as a way to justify the tax increase, politicians often claim that the additional revenue will go to programs that will educate people about the harmful effects of tobacco use.  These programs are targeted toward and should be most helpful for the poorest among us. It’s a sad irony then that the group that will supposedly be helped by this additional revenue stream that the new tax generate is the same exact group that will be most burdened by it.  Perhaps the best way to help the poor and for that matter every citizen would be by lowering or eliminating these taxes all together.

In addition to preying on smokers’ addiction to the nicotine in tobacco, the government also deceives poor citizens in another way.  In an interview with The Daily Caller, Dr. Matthew Farrelly, the study’s author noted, at the same time that New York was raising taxes on cigarettes it “cut funding for tobacco control programs by half.”  For the record, the additional revenue that came from increased taxes on cigarettes was sold to the people that it would be used to fund tobacco control programs intended to help the poor.

This isn’t the first time that the money collected from taxes doesn’t end up funding the programs the government promises will be funded because of the tax.  Government uses the auspices of helping the poor by promising to use the funds to create programs to educate the public on the dangers of smoking, but paradoxically in order to generate the money the programs are intended to help.  Not only should this revelation prompt us to question where government’s interests lie, but taxpayers should also be appalled on another level because the government is out-right misleading all citizens by not using the additional revenue in the places and programs it promises to use them.

Government should concern itself less with attempting to strong arm smokers into changing their behavior and instead should be concerned about changing its own behavior.  Instead of spending time enacting taxes with the intent of modifying others’ behavior, elected officials in New York and across the country should learn from these results and use them to modify their own behavior.  In fact, legislators’ addiction to raising taxes and spending superfluously may just be an addiction greater than that which nicotine causes.  It’s time for them to kick this habit for good.

Don’t think that this obsession with tobacco taxation is limited to the United States.  The Washington Free Beacon also reminds us that “The World Health Organization (WHO) is considering a global excise tax of up to 70 percent on cigarettes at an upcoming November conference, raising concerns among free market tax policy analysts about fiscal sovereignty and bureaucratic mission creep.  In draft guidelines published this September, the WHO Framework Convention on Tobacco Control indicated it may put a cigarette tax on the table at its November conference in Seoul, Korea.”  TPA has written a previous blog on the issue here.

The facts are now clear; tobacco taxes hurt the poor and are Fool’s Gold for governments as a way to raise revenue.

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