NCPA - National Center for Policy Analysis

Hooked On Tobacco Taxes

July 26, 2000

On July 14, a Florida jury levied $145 billion in punitive damages on the tobacco companies for injuries caused by cigarettes. However, the Wall Street Journal reported (July 17) that "...state politicians, such as those in Florida, are laboring to ensure that cigarette manufacturers continue producing healthy profits...."

Florida rigged its laws to make it almost impossible for the tobacco companies to defend themselves. But as it became clear that the awards were threatening the industry's survival, Florida relented, passing new legislation that sharply eased the burden.

In short, government has essentially become the partner of Big Tobacco. That is the history of tobacco regulation, which is documented in an excellent new book, "Cigarette Wars: The Triumph of 'The Little White Slaver,'" by Cassandra Tate (Oxford University Press).

  • Between 1890 and 1930, 15 states banned the sale, manufacture, possession, and/or use of cigarettes.
  • Some 22 other states seriously considered similar legislation.
  • Many municipalities banned tobacco advertising, prohibited smoking near schools and made it illegal for women to smoke in public.

Groups like the Anti-Cigarette League of America lobbied extensively for anti-tobacco legislation. They urged that the word "poison" appear on each pack above a skull and crossbones.

But within a few years, the anti-cigarette crusade collapsed. Ironically, Prohibition was a major factor. When alcohol became illegal in 1920, a major source of government revenue dried up. So politicians raised taxes and eased restrictions on tobacco to make up the lost revenue.

Years ago, Nobel Prize-winning economist Gary Becker warned zealots against using taxes to penalize tobacco companies and reduce consumption. "The conflict between tax revenue and consumption reduction may seriously affect government policies toward smoking," he wrote. "If the feds get hooked on the revenue generated by smoking taxes, Congress may hesitate to impose severe regulatory restrictions on smoking."

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, July 26, 2000.

 

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