Wednesday, April 13, 2011

Discount Cigarettes Tax Increase Is A Good Public Policy

discount cigarettes tax
Discount cigarettes cost less in Louisiana than in 47 other states. Not surprisingly, we have the ninth-highest rate of tobacco use in the country. Equally unsurprising: Louisianans rank No. 2 in terms of how unhealthy we are.While Gov. Bobby Jindal repeats his mantra of no new taxes, the state suffers from severe erosion in crucial public services due to lack of revenue. This shortfall is caused, primarily, by the largest tax cuts in state history, which the governor supported. Rather than relying almost exclusively on cutting education, health care and other vital investments in Louisiana's future, we need a balanced approach that includes revenues.

A good place to start would be increasing the state's tax on discount cigarettes. Adding $1 per pack to the current tax of 36 cents would raise more than $250 million in badly needed funds.What could Louisiana do with $250 million?Here are just a few of the better choices that would be available: add more than 100 new scientists at Pennington Biomedical Research Center, one of the country's premier research institutions; open school-based health centers in more than 60 percent of public schools; reduce K-12 class sizes by hiring more than 6,000 additional teachers; fully fund Go Grants, the state's need-based college scholarships; eliminate the governor's proposed increase in college tuition and fees so more Louisiana families can afford to send their kids to college.

Raising taxes on discount cigarettes would have several other beneficial effects. First, it would reduce the number of people who smoke. Studies show that smokers, especially teens, are price sensitive -- as the cost of discount cigarettes goes up, the number of smokers goes down. If they can avoid getting hooked in their teens, people are much less likely to smoke as adults.

Second, reducing the number of smokers will reduce long-term health care costs. According to the federal Centers for Disease Control and Prevention, more than 675,000 people, or 20 percent of adults, in Louisiana regularly smoke discount cigarettes.

Smoking costs the state $1.47 billion to treat tobacco-related illnesses such as heart disease, lung cancer and emphysema. Medicaid, which insures one quarter of Louisiana's population, bears $663 million of this smoking-related expense. Reducing the number of smokers would pay large, recurring benefits far into the future.

Third, raising the discount cigarette tax would generate revenue to help close the $1.6 billion budget deficit the state faces in the coming fiscal year. Without new revenue, more necessities will be on the chopping block. Thousands of working men and women face losing their jobs. Families will pay more to send their kids to college. Medical care will be more expensive and harder to get. Our state's already crumbling infrastructure will continue to deteriorate.

Also, increasing discount cigarette taxes is politically popular. More than 70 percent of Louisianans support raising these taxes, according to the recently released 2011 Louisiana Survey by the LSU Public Policy Research Lab. Discount cigarette taxes, along with taxes on gaming and alcohol, are taxes that the public most strongly supports increasing. Now is the time to act. Louisiana has not raised discount cigarette taxes since 2002, when it also extended a previously enacted 4 cent per pack tax. That extension is scheduled to expire next year, at a cost of $12 million annually.

We need a balanced approach to resolving Louisiana's fiscal crisis, one that gives more than lip service to having everything on the table. While Gov. Jindal might feel his stubborn repetition of "no new taxes" will be good for his personal political future, it is bad for the people of Louisiana.

In a time of severe shortfalls in revenue coupled with rising public needs, it makes no sense -- beyond a hard-hearted political calculus -- to oppose a tax that is highly popular, generates significant new revenues, and has large, long-term health benefits for the people.

Edward Ashworth is director of the Louisiana Budget Project and Andrew Muhl is government relations director for the American Cancer Society. Both are based in Baton Rouge.

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