For taxation addicts, over a billion dollars more this year
in spending is not enough. A per capita tax burden that is 5th highest in the nation is not enough.
Senators Birmingham's and Montigny's tax hike on tobacco
will not be enough either.
The Law of Diminishing Returns cannot be amended, repealed
or ignored by our lawmakers.
This week's political scheme is to incrementally adopt
Universal Health Care, initially on the backs of today's most vulnerable, politically incorrect pariah: the commonwealth's smokers.
But consider the tax-and-spenders' three alleged goals,
which are incompatible and mutually exclusive: reduce smoking, provide more revenue, and increase spending for growth in an
expensive entitlement program.
This latest proposed tax increase, which will make the
Massachusetts cigarette tax the highest in the nation, will certainly depress the sale of cigarettes in the commonwealth --
some smokers will quit, others will charge across the borders or shop on the Internet.
If the alleged first goal is achieved and the sale of
tobacco is reduced or eliminated, the corresponding cut in revenue will not sustain an entitlement program forever.
So when that Law of Diminishing Returns kicks in -- when the
revenue stream from this oppressed target of opportunity inevitably dries up -- the tax-addicted pols will expect
income taxpayers to replenish it.
We income taxpayers would like to see an inflation-adjusted
increase in the personal exemption from the $8 billion tobacco settlement, which was pursued through the courts as a
"reimbursement." Since we will never see that money reimbursed, use it for health-related
expenditures and leave us taxpayers and the poor addicted smokers alone.
Testimony before the Legislature's
Joint Committee on Taxation
CLT Associate Director Chip Faulker
on Wednesday, May 9, 2001
POINTS TO PONDER
PROPOSED TOBACCO TAX INCREASE
1) There is no longer any correlation between the tobacco
taxes and smoking, except as a revenue stream from an easy target: politically incorrect smokers;
2) Smokers already provide almost $300 million annually to
Massachusetts from the current tobacco excise tax alone -- as well as the
additional 5% sales tax on tobacco products, roughly another 15-20 cents per pack of cigarettes;
3) The state reportedly pays only $200 million of that
annually on "smoking-related illnesses" for uninsured smokers, netting $100 million a year from the tobacco
excise tax for the state's general fund - plus what tobacco sales contribute to the state sales tax;
4) The "tobacco settlement" of $8 billion-plus over 25 years
contributes an additional annual $300 million to the state's coffers. The cost of the settlement was passed on
to beleaguered smokers with a 50 cents per pack price increase, a hidden tax that must be added to the
proposed "$1.28 per pack" -- bringing the total tax in Massachusetts
to $1.78 per pack of cigarettes -- plus the additional sales tax of about 15-20 cents;
5) Low/No-tax New Hampshire is only a few miles north.
Smokers, further encouraged to cross the border for increasingly significant savings, while there will likely
spend on other sales tax-free household items as well, depressing Massachusetts sales tax revenue;
6) Once instituted, entitlement programs are forever. When
tobacco tax and sales tax revenues inevitably decrease -- one of this bill's stated goals is to reduce consumption --
and prove to be insufficient, where will funds for "universal health care" come from next?