A tax whose time has come
Published on -1/31/2010, 10:10 AM
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Jon Hauxwell
Like the rest of the country, Kansas has fallen on tough economic times. Now the Legislature might have to fall on its collective sword.
Obliged by law (and also by good sense) to balance the budget, policymakers have cut about as much wasteful state spending as they can. Pockets of waste scattered among otherwise productive programs are difficult for legislators to surgically excise without causing irreparable damage to critical services.
You've seen the TV commercial. "I want unlimited minutes," asserts the young woman, "and no roaming fees, and a new state-of-the-art cell phone every six months -- and I don't want to pay for any of it."
That's what many Kansans want, too. Infrastructure maintenance, accessible health care, law enforcement, mental health facilities, schools from Head Start to post-grad -- the list of arguably essential services is very long. But we don't want new taxes to pay for them, never mind that both costs and population have inflated since the last round of tax hikes.
Legislators are on the horns of a dilemma -- maintain basic functions or honor the "no new taxes" mantra. Can't do both. This is an election year, which only underscores many legislators' basic priorities: Get re-elected; raise enough money to campaign for re-election; and avoid ticking off the electorate.
Gov. Mark Parkinson has proposed several actions that could help our finances. He advised a temporary one-cent sales tax boost, immediately and reflexively criticized as regressive (cutting mental health services and letting highways deteriorate are other examples of regressive actions). He also focused on tobacco.
Bringing cigarette taxes up to the national average, while bumping the tax on "other tobacco products" (cigars, snuff, loose tobacco, etc.) for the first time in decades, has an obvious direct benefit for revenues -- around $68 million a year.
Will this send some tobacco users across state borders to buy in bulk from Missouri and Oklahoma vendors? That could well be the case, on a limited scale, for a limited time. Others lament that higher taxes will cause so many smokers to quit that the revenue will disappear after we've come to rely on it.
Remember, we're dealing with an addiction here. It would be great if a higher tax would eliminate the tobacco problem, but it won't. (More on this later.) Whenever other states have bumped tobacco taxes, smoking prevalence did fall, but the higher price more than compensated, and tax revenues actually increased.
If we really could tax ourselves out of the tobacco business entirely, the savings to the state would dwarf the loss of tobacco tax revenue.
Tobacco addiction costs society -- in Kansas, not California -- $1.9 billion every year. Half is from additional health care expenditures, and half is due to lost productivity (smokers get sick more, miss more work, or work impaired).
That adds up to $2,200 per year per smoker, and smokers themselves pay only a small portion of that cost. A 24-year-old male's tobacco addiction will cost society $220,000 over his lifetime (this figure includes costs not specified above, e.g. "years of productive life lost"); a female runs up a lesser tab of $106,000.
Overall, every pack of cigarettes sold in Kansas costs us all about $40. A tobacco tax is a users' fee, but the hike proposed by the governor still doesn't come close to balancing the ledger.
We know that tobacco use correlates inversely with education and income. That is, people who are relatively uneducated and less wealthy are more likely to smoke or chew. So this is a regressive tax proposal, right?
Unfortunately, tobacco disease itself is a regressive phenomenon. Low socioeconomic groups are hit hardest by heart disease, diabetes, lung damage, cancer, and many other illnesses caused or aggravated by tobacco use. The state's Medicaid expenditures on tobacco disease amount to $196 million annually.
Low-income smokers are more sensitive to price hikes, more likely to quit or cut back. When tobacco taxes go up, low-income users benefit more than any other group.
There are other ripple effects, too. For every 10 percent rise in tobacco taxes, smoking by youths drops 6 percent to 7 percent -- 11,800 Kansas kids under age 18 try cigarettes for the first time every year, and 2,900 of them will become addicted. All underage smokers together consume 7.5 million packs of cigarettes yearly.
At present Kansas smoking levels, 54,000 of today's kids will die because of their addiction. Some kids will quit eventually, and their risks will drop rapidly after they do. Of all those who continue to smoke, half will die from tobacco disease -- on average, 15 years earlier than they would've otherwise. Those are years that could've been spent enjoying hard-earned retirement. Years spent mentoring cherished grandchildren, watching them grow up, attending their weddings and graduations.
We all gotta die sometime, right? But 15 years prematurely?
And if you think tobacco disease is a benign way to go, like rolling over in your sleep, think again. It's no gentle death -- convulsing in pain with every breath, yet afraid it'll be the last.
Combined state/federal taxes to cover smoking-caused government expenses amounts to $572 per household. Most of us -- 80 percent of us at current smoking prevalence levels -- are subsidizing addiction's consequences for 20 percent.
A modest increase in tobacco taxes won't eliminate that disparity, but it's a step in the right direction.
Jon Hauxwell, MD, is a retired family physician who grew up in Stockton and now lives outside Hays.
hauxwell@ruraltel.net









