SMOKERS PAY THEIR WAY
May 25, 2005
Minnesota's proposed "Health Impact Fee" will require smokers to pay an additional 75 cents per pack to cover societal costs. But is this a tax or a fee? Smokers are already paying for those costs to society, so why should they pay more, asks the Tax Payers League (TPL)?
Currently, smokers pay a tax of 48 cents per pack plus a "distributor license fee." Federal taxes add 39 cents per pack. Additionally, smokers fund tobacco settlements amounting to hundreds of billions of dollars.
According to a study in the Journal of the American Medical Association (JAMA), the societal costs of smoking amount to about 15 to 24 cents a pack in 1986 dollars, which translates into 27 to 43 cents a pack in 2005 dollars. Those costs are less than the current taxes charged by the state and federal government:
- Smokers were paying an extra 64 cents a pack in 1998 to cover the cost of taxes charged by the state and federal government.
- This year alone, Minnesota is getting about $200 million in tobacco settlement dollars from smokers, adding up to $1.6 billion paid into state coffers since 1998.
- Tobacco products are also subject to a 6.5 percent sales tax.
Smokers pay $1.60 per pack in direct and indirect taxes to the government, with the average retail price of a pack at $3.81. When compared to the estimates by the JAMA, "smokers are subsidizing non-smokers to the tune of over a $1 per pack," covering the proposed societal costs, says David Strom of the Tax Payers League.
Since a majority of smokers fall into the lower-income bracket, the Health Impact Fee will become one of the most regressive taxes. The Health Impact Fee on cigarettes also opens a can of worms; sugar, corn syrup, trans-fatty acids, saturated fats, and a whole host of other foods are known to have adverse health effects. "What next, a twinkie tax?" asks Strom.
Source: David Strom, "Studies Show Smokers Pay Their Way," Tax Payers League, May 23, 2005.
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