Sin Tax For Health

Many states have considered enacting additional taxes -- so-called "sin taxes"-- on tobacco products to help defray the skyrocketing cost of health care. The Kaiser Family Foundation has just released a report on this very subject that should prove of interest:

Several states have sought to increase their tobacco taxes to fund health care programs and address budget deficits, but efforts to increase tobacco taxes in some cases have prevented the passage of health care proposals, the New York Times reports.

According to the Tobacco Merchants Association, in 2008, 22 state legislatures have considered bills that would increase tobacco taxes. Last year, 11 states enacted such legislation, according to the National Conference of State Legislatures. R.J. Reynolds Tobacco estimates that state tobacco taxes raise $14.5 billion in revenue annually and that the federal tobacco tax raises $7.3 billion in revenue annually.

"For some states, tobacco taxes are seen as a kind of magic bullet that are really quite different from less popular kinds of taxes," Richard Cauchi, a health policy analyst from the National Conference of State Legislatures, said, adding, "Legislators are able to argue that it's a sin tax, and the voters seem more accepting if they know the funds are going to be earmarked for some kind of health initiative."

The report goes on to detail recent efforts along these lines that various states have put on the table. California, New York, South Carolina, and Massachusetts efforts are detailed on their site.

As always the arguments pro and con have a familiar ring to them:

• "It will help prevent underage smoking."
• "It is an unreliable source of revenue."
• "It is unfair to smokers"
• "It will generate the revenue we need."

It is no secret that the tobacco companies are against this, and they bring an amazing advertising budget with them when they engage the battle for public support. California Speaker Fabian Nunez has been quoted many times across the media as saying that "Big Tobacco" killed health care efforts in California. The question truly is whether this is a viable approach or not. Will diminishing sales in areas that do enact a tobacco tax provide enough revenue to make an impact on the health care system as it stands?

SOURCE: "Kaiser Daily Helath Policy Report" 04/21/08
photo courtesy of Porcelin Girl used according to its Creative Commons license