Wednesday, March 23, 2005

Washington State Considering Cigarette Tax Hike to Fund Education; 11 Other States Considering Tax Increases

Washington Governor Christine Gregoire has proposed a 20 cent per pack increase in the state cigarette excise tax, with a 60 cent per pack increase to follow in January 2007, in order to fund an initiative that would reduce school class size and create more student slots in state colleges, according to an article in Tuesday's Seattle Post-Intelligencer. Washington currently has the ninth-highest cigarette tax in the nation. According to the article, 11 other states are considering cigarette tax increases during the current legislative session. Public health advocates are generally among those who support these cigarette tax proposals. For example, in Texas, health advocates were the ones cited in a recent article as pushing for a tobacco tax increase, which would "help stretch the thin state budget."

The promotion of cigarette tax increases as a part of tobacco control practice started with the highly successful Proposition 99 in California, an initiative that increased the cigarette tax by 25 cents per pack and allocated 25% of the revenues to tobacco prevention and education programs, tobacco research, and smoking cessation programs (an approach that was followed in Massachusetts, Arizona, and Oregon). More recently, however, tobacco control and public health organizations have begun to promote cigarette tax increases to fund non-tobacco-related programs; this year, many of the tax increases that health advocates are supporting are being proposed to make up for general state budget shortfalls or to fund completely non-health-related programs that have been cut due to these budget shortfalls.

The Rest of the Story

While initially an advocate for cigarette tax increases as a public health and tobacco control strategy, I have come to change my position and I no longer view these tax increases as an appropriate public health approach unless the revenue (at least a significant portion of it) is used in a way that directly benefits smokers. I just cannot see a public health justification for using smokers as a way to raise revenues to fund programs that the government should otherwise be funding from general revenues.

In other words, if public health practitioners are faced with a decision about how to promote the funding of necessary and worthwhile health programs, then a justified approach would be to encourage policy makers to allocate funds towards those programs. That may mean arguing that these programs are more of a priority than some other currently funded programs or it may mean arguing for some new source of revenue. But it does not seem appropriate to repeatedly call on smokers to be the ones to share the burden of funding all of these programs that are not being funded adequately.

When cigarette taxes are raised substantially without allocating a portion of the funds to directly benefit smokers, then I believe those taxes are regressive. Because of the strength of nicotine addiction, it is a fact that the costs of the funded programs will be borne by smokers. If we in tobacco control are correct in our assertion that nicotine is powerfully addictive, then the reality is that smoking does not represent a choice that people make that they can quickly and easily change. So there is no way to avoid the consequence that for the large majority of smokers (who are going to be unable to quit), they will be paying the increased costs that are necessary to fund programs that should have already been funded by other means.

I find the situation quite different when the purpose of the tax increase is to provide funding that, in some way, benefits smokers directly. I think it can be effectively argued that providing smoking prevention programs as well as services to encourage smokers to quit and help them to succeed represents a direct benefit to smokers. After all, any smoker could potentially take advantage of the services being made available to them and it is reasonably in the interest of any smoker to encourage future generations to avoid this addiction. In this case, while smokers are being asked to shoulder the burden of funding certain programs, at least they are directly benefiting from the increased costs. The direct benefits of the policy accrue to both smokers and nonsmokers.

But the kind of tax increases for which public health and tobacco control advocates are currently lobbying are in most cases aimed at building roads and bridges, providing health services, paying for education, or funding a host of programs and services that the government should arguably be providing already. There are no direct benefits to the overwhelming majority of heavily addicted smokers who will not quit due to the cigarette tax, yet they are the ones shouldering nearly the full burden of the costs. I do not think it unreasonable to ask that public health practitioners insist that at least a portion of the resulting revenues be used for programs that will directly benefit the smokers who are providing the essential funds.

There are two other problems with promoting cigarette taxes as a way to raise general revenues or fund non-tobacco-related programs. First, if public health practitioners support this approach then it seems that they should similarly support taxation on other products that represent unhealthy behaviors, such as drinking alcohol, eating lots of fast food, or driving an SUV (which I believe increases mortality in motor vehicle accidents). However, I have not heard any tobacco control or public health organization lobby for an increased tax on alcohol, fast food products, or extremely large automobiles (or any other "unhealthy" consumer product) in order to fund much-needed government programs. If the argument for levying a tax on fast food products in order to decrease school class size sounds weak, then I can't see why an argument for levying a tax on cigarettes for the same purpose is a strong one.

Second, when cigarette tax revenues are used to fund specific programs or to make up for budget shortfalls, the state then becomes reliant upon cigarette consumption to maintain these programs and services. It creates, instantaneously, an inherent incentive for the government not to be successful in sharply reducing smoking. The long term impact of this reliance on sustained smoking as an essential source of revenue may well negate the positive short-term effect of the tax on reducing cigarette consumption. I don't see this as a problem when the revenue is being allocated specifically to establish well-funded tobacco prevention and cessation programs, because the incentive to maintain smoking prevalence is moot - the state has already funded what should be an effective program to reduce cigarette consumption. But in the absence of such a program, the reliance on cigarette revenues will make it infinitely more difficult for health advocates to ever succeed in convincing legislators to fund a program that, if it works, will substantially reduce funding for other state programs.

While the successful cigarette tax-funded tobacco control programs such as those in California and Massachusetts should serve as models for public health and tobacco control practitioners, the deterioration of this policy approach into an all-out attempt to raise cigarette taxes as a source of revenue for any program under the sun is, I think, unfortunate, unfair to addicted smokers, and unjustified on public health grounds.


Anonymous said...

If tobacco is as powerfully addictive as you say, doesn't it make sense to increase the tax even if the sole purpose is to prevent the initiation of tobacco use to youth?

Michael Siegel said...

The problem is that a cigarette tax increase cannot have the sole purpose of preventing smoking initiation because by its nature, an increased tax raises revenue and that revenue must be used for something. So I think that if public health practitioners decide that a cigarette tax increase is the approach they want to take to decrease youth smoking, then it is incumbent upon them to ensure that there are direct benefits of the tax, not only direct costs, to smokers.

Anonymous said...

Wouldn't a direct benefit of the tax be that less kids are starting to smoke?

If we were to look at two different states, one that passes a tobacco tax and spends the money on roads and another that does not increase tax at all. The major difference is that the first state will have less smokers (and nicer roads). While the other state will continue with the increased costs and deaths while kids continue to become regular smokers.

Michael Siegel said...

You make a good point that perhaps a state with an increased cigarette tax (and therefore fewer smokers) and better roads would be better off than a state with neither. But the policy choices are not to have a cigarette tax increase to fund new roads vs. to do nothing. The choices include having a cigarette tax to fund the new roads, finding a different source of income for the new roads and also allocating substantial funds for tobacco control, making cuts in other parts of the budget so that roads and tobacco control can be properly funded, placing increased taxes on other items to fund the roads and perhaps tobacco control as well, and increasing the cigarette tax to support both roads and programs to directly benefit smokers. There are a rich variety of policy options to choose from, and what I guess I'm saying is that it's not clear to me that choosing to tax cigarettes and use the money to pay for roads is the best option.

Incidentally, I view prevention of smoking among youth as a general benefit of the tax that accrues to society, not as a direct benefit to smokers. It is a laudable goal to decrease the number of smokers, but it is the smokers who should be required to pay for it?

Curmudgeon said...

The other thing about taxing sin for the purpose of general revenue is that it makes the state dependent upon the proliferation of sin for its financial survival. This has moral as well as practical consequences.

I'm not as opposed to doing this as you are, however, Michael. Your opposition comes from an idealistic perspective: "If we're going to tax smoking, let's spend the money on programs to help people quit." Or from the larger principle, "Programs should be funded by the people who benefit most from them." I sort of agree (except, how can po' people fund welfare?).

But I have a greater tolerance for sin than you do. I'm for making or keeping tobacco, alcohol and other addictive drugs legal. If someone is a heroin addict and hits someone over the head to buy heroin, he should be punished for hitting someone over the head (in my view), not for buying heroin. That's his business.

Given that sin (like the po') are always with us, we might as well tax it. In practice, there's little danger that sin will become so scarce that the gummint will have to start boosting it in order to raise enough revenue to keep itself in business.