Kansas Gov. Katherine Sebelius’s plan to use cigarette tax increases to pay for health costs should be worrisome to non-smokers. (September 9, “Sebelius will ask for 50-cent increase in cigarette tax to help pay for health care reforms”) Cigarette taxes sold to the public as funding high-profile needs such as health care are particularly deceptive. While the approach may seem appealing to non-smokers, historically such tax increases are notoriously unpredictable, and all too often their revenues are raided for other projects.
Cigarette tax returns will continue to taper off as tobacco use declines and more smokers head across borders or to the Internet in efforts to avoid high tobacco taxes in their home state. When the revenue dries up, legislators will be stuck with two options: roll back the funding for health care (highly unlikely) or raise taxes somewhere else (very likely).
Proposals to fund health care through cigarette tax hikes should be seen for what they are: an unstable and regressive tax increase targeting a minority of citizens combined with yet another hike in government spending, all wrapped in one fiscally irresponsible package.
John Nothdurft ([email protected]) is the budget and tax legislative specialist for The Heartland Institute.