Tax proposal is based on faulty reasoning

By Henry J. Waters III ~ Columbia Daily Tribune

Nontraditional tobacco traders are not reporting campaign donations to the No on Proposition A campaign, but they have plenty of reason to hope voters pass the big increase in cigarette taxes. If we voters approve the plan to raise taxes to 72 cents on a package of cigarettes and boost other tobacco taxes by 20 percent, sellers of cigarettes on the Internet and black-market smugglers will want to kiss us.

Already tax-free Internet sales are soaring as states blindly raise cigarette taxes far out of proportion to levies on other consumer goods, and in Missouri smuggling incidents are increasing even at current tax levels.

The huge cigarette tax hike is based on several false premises.

For many, it is a moral statement. Smoking is bad; therefore we will use the power of the state to discriminate with tax policy against those who sin by buying the product. If moral arbiters want to legislate against smoking, they should do so honestly with proposals for tobacco prohibition. Of course, they know this never would pass. If it did, it would be a disaster akin to liquor Prohibition in the 1920s. So they use incremental tax policy as a moral battering ram. Instead, let people make personal decisions not to smoke. Let tax policy be amoral and equitable, designed merely to raise revenue fairly. Both are somewhat wishful ideas, but let us recognize their respective venues and honor them the best we can.

For some, it is a money-raiser. With pious pronouncements about how tax proceeds will be spent, these promoters sell us snake oil. They say 43 percent of the money would go for hot-button heart-tuggers: prescription drugs for seniors and other good stuff for the poor, women, minorities and children. Another 29 percent would go for hospital trauma care, 14 percent for life sciences research, 7 percent for smoking prevention and 7 percent for early childhood programs.

This list, of course, is crafted by promoters wanting to pass the tax and has nothing to do with rational state budget-making. Who says 14 percent should go for life sciences research or 7 percent for early childhood programs? Twenty-nine percent for hospital trauma care? Moreover, partial bits of earmarked revenue like this disappear into larger public appropriation cauldrons. None of the mentioned beneficiaries should count on overall revenue increases if the tax passes. I would respect the effort more if promoters merely promised to add the money to general revenue. How have lottery proceeds affected state spending for education? Even though some voters will swallow such spending promises, I wish promoters and policy-makers who know better would be more honest. Instead, they simply let such myths live, knowing many citizens want to believe them and the rest don't care.

For some, it is a way to punish tobacco companies. This is a primary stimulus behind the huge money settlements exacted from these firms nationally. Current tax-hike promoters are not bothered by expectations that a higher tax will promote black-market and Internet sales. They don't mind that the tax is paid by a group of narrowly targeted consumers, a wholly unfair approach. It would make as much sense to impose a tax of 50 cents or a dollar on each hamburger or bottle of beer sold in Missouri. Those who scoff please explain the difference. That cigarettes are worse? That beer and burger lobbyists won't allow it? These arguments don't wash as a basis for good tax policy.

Proposition A is a reprehensible idea that should be sent down the drain Nov. 5. Let's all vote "no" and give this thing the whuppin' it deserves.

Waters is the publisher of the Columbia Daily Tribune. This editorial originally appeared in the Daily Tribune on Tuesday.