Cigarette Tax May Have Opposite Result

Kulongoski has proposed an 85-cent cigarette tax hike to fund health care for children that may produce the opposite effect. After politicians enacted a $1.28 cigarette tax hike a few years ago, sales dropped by $22 million in just the first six months (-10.4%). Internet sales, border sales and underground markets were blamed for the huge loss in revenue. As we race to become the number one tobacco tax we end up witnessing the tax revenue racing the opposite direction. Under this scenario we have the worst of all worlds where the politicians don’t get their expected tax revenue and Oregonians get overtaxed. I suppose the politicians do get the reward of public acolades for doing something for the children (at other people’s expense and regardless of wether the idea is effective or not). Politicians are so used to taxing without consequence that they have have forgotten that the laws of consumer pricing/choice still do exist. If they overtax a product people will stop buying it or shop somewhere else. If we want health care for kids, why not lower taxes for working families so they can better afford health insurance, rather than raising taxes on Oregonians and shifting children’s dependence from their families to state government.

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Posted by at 08:18 | Posted in Measure 37 | 30 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Steven Plunk

    I doubt this is a serious proposal. Kids, good. Cigarettes, bad. Who could oppose such a tax hike? Well smart people could as Jason has shown.

    Sleepy Ted is just dancing before the election trying to get attention and votes. Cheap hardly describes his antics. People like him sicken me.

  • Why don’t we implement a tax credit scheme – if your business offers health insurance at a certain level to all employees, no state corporate taxes.

    Quite honestly, I don’t think that a middle class income tax cut would encourage enough people to get health coverage – but nobody is going to refuse health insurance as part of their benefits package.

    • Capt An-on

      Jeff, you’re right, we need a dose of reality check. Lowering taxes for working families WILL NOT allow them to afford health care. Health care costs are so out of control even a savings of 1000 a year by families will not cover the premiums demanded by insurance companies. My parents make a decent wage, but my dad is not working for a company. He is his own employer. The only insurance my parents can afford is catestrophic. meaning they only have coverage (and not very good coverage at that) in cases of surgery, or major work. My mom’s perscriptions run in the hundreds per month.

      We seriously need to live in reality. a tax cut is NOT going to spur people to buy health insurance because quite frankly, very few can. The insurance industry (which some in this forum actually think are looking out for our best interest as consumers – see the Auto insurance debates here) far outpaces inflation in cost increases. the insurance industry needs government intervention in order for people to afford it. decent health care is one of the reason so many oregonians are jealous of and hate public employees – because they actually have decent health benefits.

      And lastly, in my mind, who cares if the tax on cigs is raised? Smoking costs tax payers long term a heck of a lot more because we end up footing the bill for the health care of those who smoked and don’t have insurance. we pay for higher premiums, we pay for surgeries and expensive care and hospice. the tax increase would get us closer to prices in Washington anyway. there may be a drop in revenue, GOOD! means less smoking. Now if only Oregon would outlaw smoking in public places like bars!

      • Chris McMullen

        I assume you’d support a tax on Krsipy Kremes, Big Macs, candy bars, Twinkies, ice cream cones, etc.? Those foods promote obesity, diabetes, heart disease and tooth decay. Uninsured and unhealthy fat people cause increased health premiums which we all have to pay.

        On that note, let’s put an extra $1.00 tax on Ripple and Old English. Then homeless bums can start paying some of their share of the burden they cause.

        • Capt An-on

          No. Because in moderation, sweets are fine. exercise and portion control counter the effect of sweets. lazy asses cause obesity. There is no ‘second hand obesity.”

          Smoking… there is nothing healthy about smoking. it’s jammed packed with over 2000 carcinogens. moderation doesn’t help. It kills those who don’t even smoke Are you really equating the two? Because no rational person would.

          • Chris McMullen

            Then we’ll tax anyone with a BMI over 25%. Say $1000 a year?

          • Capt An-on

            You still didn’t answer the question. Are you really equating the two?

            Second question: Are you, one who passionately advocates less government, really interested in the government using our health records for a tax? If not, don’t play games by posing such questions. c’mon, be real and genuine in the debates

          • chris McMullen

            The whole thing is silly, Mr.-afraid-to-use-his-own-name. We shouldn’t be taxing folks for ‘sinning.’ People take risks all the time. Are we going to tax bicyclists? They have a higher injury ratio than non-bicyclists. How about skateboarders and mountain climbers? Should we tax knives, lawn mowers and ladders? They cause a large amount of injuries. You can get chronic back pain, carpal tunnel and blood clots from working at a computer all day. Nothing we do is risk free.

            And to single-out those who do something society deems dangerous (ie smoking) is discrimination. Try telling homosexual men they need to pay a tax because they have higher rates of aids.

            Furthermore, lung cancer for those exposed to second hand smoke compared to those not exposed is statistically insignificant — no matter what the EPA tells you.

            If you don’t like smokers, stay out of bars that allow it. Christ, does big-brother government have to regulate everything? Ever heard of personal responsibility?

          • Captain An-on

            You *STILL* didn’t answer the question. Are you really equating smoking as the same with eating sweets? Do you really think they should tax those who eat sweets?

            Personal responsibility is great, and yes, more people need to exercise it. However, it is the governments responsibility to protect the greater good, such as national security and from dumbasses who smoke in public places where i have no choice but to be affected by it. Places such as in the work place, outside of hotel entry’s, walking down the street, ball games etc. I don’t care if people smoke. but don’t let that deadly crap get near me or my kids or family. I can’t control that. Washington was wise to outlaw smoking in public places of congregation. Oregon should do the same.

            I know you don’t like government, i know you don’t like regulation, and i know you don’t like taxes. but let’s be realistic… taxes need to be collected to provide for the public good. it’s a matter of where it is collected. i see no problem with cigs being taxed more… especially considering the massive negative externalities it causes on individuals AND society and how our current taxes rate compared to California and Washington.

            and being the good libertarian you are, please, do yourself a favor and quit using hollow arguments you don’t even believe in such as taxing sweets, knives etc. it shows a lack of sincerity in the debate and loses credibility. generally, i respect opinions of people who debate fairly and honestly, and generally you do. but using games like that gets no one anywhere.

  • Jason

    Even small tax cuts help families afford decisions they would not do otherwise. For the self-employed tax cuts help their business grow faster and their customers availability grow faster also.

    In terms of insurance rates going up faster than inflation. Well, the latest government mandates do have a bad side effect — they raise insurance costs. Junk lawsuits also play their role. Raise taxes, mandates and lawsuits and you are pushing people into dependency.

    In terms of smokers paying the cost of the health burden they cause. This gets real off center because the politicians keep spending the money on unrelated items. I don’t think Kulongoski’s plan to load children on the cig-tax because these kids are chain smokers. It is political — and politics is not good policy.

    • ex Oregon Republican

      Ted may be acting goofy by bringing up this cig tax plan again — it’s entirely possible that it will actually decrease revenue, as the article says.

      But Ron is promising all sorts of things — increased funding for universities, for example — with not a clue about how to pay for it, except vague promises of unnamed “efficiencies”.

      It’s all hot air, as far as I’m concerned. I plan to sit out this election unless one of them starts making some sense.

      It’s almost too late for Saxton, unless Ted really shoots himself in the foot. But people are so used to his blathering, I think he’s almost immune.

      The face is he’s pretty well liked, especially compared to Saxton. Don’t let Ted’s approval rating fool you — the public employees are mad as hell at him, but that doesn’t mean they’re about to desert him for Ron.

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