Government’s Insatiable Greed will always Keep Smoking Legal

Posted by PITHOCRATES - March 18th, 2011

The FDA may Ban Menthol Cigarettes

Everyone knows that smoking is bad for you.  When you go to the hospital part of your diagnoses includes “Do you smoke?”  And your answer to this question will determine your treatment.  It’s that bad.  And we all know it.  Have known it for the longest of time.  The only thing keeping smoking alive in this country appears to be cool celebrities who smoke.  And kids who want to be cool emulating cool celebrities who smoke. 

Well, it looks like things may be changing.  Cigarettes now fall under the jurisdiction of the FDA.  And they may be doing something to put an end to this filthy habit (see FDA panel says ban on menthol cigarettes would benefit public health by Andrew Zajac, Washington Bureau, posted 3/18/2011 on The Los Angeles Times).

A Food and Drug Administration advisory panel Friday said that “removal of menthol cigarettes from the marketplace would benefit public health in the United States…”

Antismoking groups hailed the panel’s advice and urged the FDA to follow through with a ban.

Yeah, well, don’t get your hopes up.  It is unlikely that the government will ever ban menthol cigarettes let alone tobacco products in general.  Why?  They’re addictive.  Well, yeah, you say, that’s why the FDA wants to ban them, yes?  They’re bad for you AND they’re addictive.  I mean, what government that cares for its people wouldn’t want to ban these horrible, nasty things?  I’ll answer that with one word.  Taxes.

Tobacco companies also warned that a menthol ban would lead to a large black market, loss of tax revenue and make it easier for underage kids to smoke.

The 12-member advisory committee acknowledged that development of a black market was a possibility, but left it to the FDA to determine the seriousness of the threat.

A black market is serious.  Because it would only compound the loss of tax revenue problem.  And that’s what the government sees when they look at cigarettes.  A very lucrative stream of tax revenue.  And they will never turn off that spigot.

Big Government Loves Big Tobacco

For the non-smokers out there, have you noticed the price of a pack of cigarettes?  They’re pretty expensive.  But it’s not the tobacco companies making them expensive.  It’s government.  There’s federal and state taxes.  And some cities even add their own tax.  They’re all jumping onto the gravy train.  They thank God for the tobacco companies and their addictive products.  They’re great for taxing.  And even suing.  Government just loves them.  And the last thing anyone in government wants (at any level) is for anyone to quit smoking.

Let’s start at the top and work backwards.  The federal excise tax currently on cigarettes is $1.01 per pack.  State taxes vary.  Virginia, where they grow tobacco, adds $0.30 per pack.  The lowest tax is Missouri which adds only $0.17 per pack.  New York tops the states and adds $4.35 per pack.  All the other states fall somewhere in between, averaging $1.45 per pack.  (All cigarette tax data pulled from Campaign for Tobacco-Free Kids).

Some cities and counties add their own tax.  New York City adds $1.50 per pack.  Chicago adds $0.68 on top of the $2.00 Cook County adds.  As you can see, cigarettes can be very lucrative to government.  As long as no one quits smoking.  So you can be pretty sure that government won’t ever kill this golden goose.

Balancing Budgets on the Backs of Addicted Smokers

But governments can get greedy.  That dirty, sexy money can do this to you.  It’s intoxicating.  And there’s just so much of it.  So they keep raising their taxes.  But sometimes they go too far.  Because it’s a small world after all.  And there’s another state just a short drive away.  Across the border (see Chicago Cigarette Tax: Study Shows 75% Of Chicagoans Buy Cigarettes Out Of City by Will Guzzardi posted 5/20/2010 on The Huffington Post).

According to the University of Illinois at Chicago, 75 percent of sampled cigarette packs found on the streets of Chicago come from out of the city, costing roughly $120 million a year in revenues…

When the packs were collected in July 2007, state and local taxes on a pack of cigarettes in Chicago totaled $4.05. They were only $1.37 outside of Cook County. This made Chicagoans 60 percent more likely than their collar-county counterparts to shirk cigarette taxes.

Increase taxes and sales drop.  And ‘black market’ activity increases (smuggling out-of-state cigarettes across the border).  A very profound lesson that so few in government ever learn.  Because of their greed, of course.

The fear of sending business to Indiana may poke a hole in the ambitions of state lawmakers hoping to create a budget for the coming fiscal year. With Gov. Pat Quinn’s controversial plan to increase income taxes unlikely to come to fruition, the state is at a loss for new revenues. And cuts to public services like education have been met with vocal opposition.

Legislators have repeatedly argued that a new cigarette tax would help stave off some of those education cuts. But with the General Assembly already on recess and no resolution in sight to the budget mess, this new report may only serve to impede consensus in an increasingly fractious legislature.

Hmmm….  Using cigarette taxes to pay for education?  Funny.  Those law suits against Big Tobacco and the high taxes on cigarettes were always to counter the ill effects of smoking.  Or so said government.  Could Scott Walker be right in Wisconsin?  Could the salary and benefits of public sector workers be so great that they have to take money from health care to pay for them?  Perhaps.

New England/New Jersey Adopt Reaganomics

Of course, one state’s financial woes are another state’s gift.  Especially for those businesses near the border (see NH, RI, NJ buck trend, propose cigarette tax cut by The Associated Press posted 3/18/2011 on Yahoo! Finance).

Bucking a national trend of raising cigarette taxes, New Hampshire, New Jersey and Rhode Island have considered reducing theirs, hoping to draw smokers from other states and increase revenue…

It’s very unusual for states to lower the tax, University of Illinois at Chicago economics professor Frank Chaloupka says. The increase in sales isn’t enough to offset the drop in state tax revenue, he says.

Instead of lowering the tax, states have enacted 100 increases over the past decade, he says.

Of course, they’re applying the opposite lessons of Chicago.  Cut taxes, increase sales.  And decrease black market activity.  At the expense of their high-tax neighbors.  Chicago would love to hate these states.

Smoker Aaron Evans stopped Thursday at a convenience store in Haverhill, Mass., for a sandwich and a pack of Marlboro cigarettes. The pack cost him $7.13. A couple of miles away, a bigger pack of the same smokes would cost him $5.99 at a market in New Hampshire, which already has significantly lower taxes than Massachusetts.

That’s the funny thing about people.  They just don’t shop for the best price when shopping for a plasma TV.  They ALWAYS shop for the best price.  And if lower taxes are only 15 minutes away, guess what?  People will save money and drive the extra distance.  Even if they have to buy in bulk to offset the added cost of driving.

Danny McGoldrick, research director for the Campaign for Tobacco-Free Kids, said other states aren’t cutting their tax rates in these tough fiscal times because they need the money. Raising the tax, he said, produces revenue despite resulting in a desired decrease in the number of smokers.

But state Rep. Christine Hamm, a Hopkinton Democrat, called the move “fiscally stupid.”

“No state has cut their tobacco tax and seen a revenue increase,” she said.

I can think of a state that cut taxes and increased revenue.  The United States.  When Ronald Reagan cut the tax rates, federal receipts nearly doubled by the time he left office.  Cutting taxes works.  For a very simple reason.  People have more money to buy more things.  If they spend all of their disposable income on cigarettes, they may not eat out as often.  And a waitress may lose her job.  Who then has to cut back on her spending.  And so on.  The more money you keep in the private sector, the more economic activity there is.  And the more economic activity there is the more taxes government can collect.  But this is another profound lesson that so few in government ever learn.

Cigarette Taxes Pay for Public Sector Workers

For all their talk government doesn’t want smokers to quit smoking.  That’s why they will NEVER ban cigarettes.  They make far too much tax revenue on smokers.  And cigarettes are better than alcohol.  Because you can smoke and drive.  Smoke at breakfast.  Stand outside and smoke at work.  Smoke at dinner.  At the bar.  After sex.  Hell, to government, smoking is sex.  Nothing is better.  They can tax the bejesus out of it.  And because everyone knows smoking is bad for you people accept these outrageous taxes.  Even smokers.  Because we so demonize them that they think, well, yes, I guess I deserve it.

And the ill health effects of smoking?  It’s a pretty specious argument when municipalities are raising cigarette taxes to pay for their public sector workers.  When you raise cigarette taxes to pay for teachers you’ve lost that argument.  Which leaves nothing but greed.  And this is why cigarettes will always be legal.  And taxes will be high.  Because of government’s insatiable greed.

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