One of the most popular ways for governments to raise money is through so-called ‘usage taxes’. These fees are levied only on those who do a certain thing or use a certain product, such as gas taxes, liquor taxes, or cigarette taxes.
The idea behind those taxes is that there are costs associated with those activities that the state bears, so by collecting the tax those costs are covered. It is similar to the theory that tolls are collected on roads to sustain creation and repair of those and other roads. Most people who live by a budget would understand the concept of ‘buckets’ which are saved and allocated for specific purposes, and having to use the college fund or vacation account for food or mortgage payments means you have really messed up.
Since I lived in Massachusetts all my life until a few years ago, I remember how the Mass Pike tolls were originally established solely to pay off the bond used to fund construction. After all, the state had earmarked gas taxes for road repairs and construction, so aside from paying for the specific project what purpose could it have?
Well, given the way government works, it could have ANY purpose! Despite all of the talk about specifically targeting fees collected to cessation programs, politicians are like that 9-year old kid who gets $5 from their grandparents and just can’t wait to get to the mall to spend it despite saying the week before that she was saving for a $10 item! Here is an example related to smoking:
Ohio took $230 million set aside for tobacco prevention, used it elsewhere despite a court challenge, and liquidated the state’s Tobacco Use Prevention and Control Foundation. New Hampshire depended mostly on the 1998 federal tobacco settlement for its cessation programs, but much of it was diverted for other budget needs in recent years. Iowa cut its anti-smoking programs nearly in half and eliminated the job of its tobacco use prevention and control director last year.
Why is this coming up now? I mean, none of this stuff is new.
Well, there are three reasons – two of which seem at odds with each other. First, coming out of Albany is the news that after cutting 50% of the anti-smoking budget for 2011 (from 80 million to 40 million), the Governor of New York is looking to cut another 15% from that budget in order to help balance the budget. Remember, New York was one of the states that got a cut of the $55 billion tobacco settlement, and also has the highest-in-nation $4.35 PER PACK tax on cigarettes.
Next, we are reminded that during down economic times – which continue now – that the sheer economics make it hard to sustain a smoking habit, with a UK report saying:
The research revealed some 9% of Britain’s nine million smokers intend to use March 11, national No Smoking Day, as their first cigarette-free day.
Dragon’s Den star and No Smoking Day president Duncan Bannatyne said: “Everybody is feeling the pinch during the current recession.
“For smokers who can spend over £2,000 a year on cigarettes it’s particularly tough, so for those who are ready to quit there has never been a better time.”
The research found that 40% of female smokers were trying to cut down or stop compared to 32% of men.
Figures show smokers in the Midlands are most likely to quit because of the effects of the recession.
Dan Tickle, Chief Executive of the No Smoking Day charity said: “Giving up cigarettes will boost your bank balance.
“But the health benefits are even greater, including easier breathing, improved fitness and healthier hair, nails and skin.”
But at the same time, the BBC reports that the stress and hardship of a recession end up making quitting harder than ever, noting:
His figures reveal the rate of quitting slowed down when recession hit the UK economy.
Professor West said: “While no-one can be sure about the cause and effect with data of this kind, this could be another very damaging impact of the financial crisis.
“Obviously we can only guess at a link, but we know that when people are under stress and have bad things going on in their lives they shorten their horizons and focus on getting through, day to day.
“They don’t have the mental energy to focus on doing things that are hard, like quitting smoking.”
Even though smoking costs money, Professor West said cigarettes were not always the first “luxury” to go. “It’s sad but true that people give up other things instead.
“Even when people are short of money we know that they can spend about 20% of their disposable income on cigarettes or tobacco.”
All of thise data comes together to paint a powerful picture: we already know that quitting smoking is hard – and that smoking is both expensive and deadly. The combined economic and health effects disproportionately target those least able to afford to quit.
Those same people have also been shown to be the most adversely targeted during a recession, losing income and health coverage or at least the ability to cover all the side expenses of health insurance. So their stress level increases and makes it harder to quit … which increases financial pressure and contributes to a vicious cycle.
Then one of the main causes of the expense of cigarettes – state taxes – which are supposed to be used in-state to specifically help smokers quit, help defray health costs, and help make sure kids never start … are being funneled away to other pet projects by politicians. It makes no sense … but in the world of politics it makes perfect sense.
And it continues:
Meanwhile, some Californians are pinning their hopes on a June ballot initiative to raise cigarette taxes to fund cancer research, a move boosted by cycling champion Lance Armstrong’s $1.5 million donation to stop kids and adults from smoking.
Colorado lawmakers have drained money intended for tobacco cessation for years – even though voters amended the state constitution in 2004 to prevent it. Lawmakers have gotten around that by declaring the state in “fiscal emergency” every year since 2008.
It is yet another constant reminder that whenever a politician talks about a usage fee intended to ‘help’ someone, he is really talking about yet another pile of money that doesn’t count in the ‘raised taxes’ column yet still ends up in the big bucket of cash used to appease whatever special interest or project is foremost in their mind that year.
And as politicians continue to play games, the health impact of tobacco that was supposed to be addressed by the huge settlement gets passed on to the public which pays in the form of higher health insurance costs, and we also see a stagnation of smoking rates since these programs have slowed, meaning that more and more kids are smoking every year … which should be the ultimate goal of these programs.
