Puffing away Dollars: The New Tobacco Tax
An increase of 62 cents per pack of cigarettes took effect yesterday. AccountingWEB estimates that about 20% of Americans over the age of 12 will be affected by the increase and the authors, plus bloggers from a number of ideological perspectives have criticized the increase as being too harsh on the working poor, a violation of the "no new taxes on Americans earning less than $250,000" pledge and that the tax is another example of a "nanny state" mentality. Supporters argue that the $10 to $15 billion in revenues raised from the tax increase will help fund expand the State Childrens Health Insurance Plan by providing dental and mental health coverage.
I am of mixed views on this one. Tobacco growers in Kentucky, North Carolina and elsewhere take yet another hit to their livelihood and both the charges of breaking campaign tax promises and "nanny state" behavior ring somewhat true. Conversely, tobacco taxes, like lotteries, are comparably more voluntary than most taxes and like most nonsmokers, I am no fan of secondhand smoke.