The goal of a cigarette tax

Taxes on cigarettes shouldn’t be seen as a viable source of state revenue.

Editorial board

 

Part of Gov. Dayton’s proposed budget includes an additional 94 cent-excise tax per pack of cigarettes, estimated to generate an additional $370 million in revenue over two years, allocated to the general fund. In comparison to other proposals in the state Legislature, 94 cents is on the low end of the spectrum. Other proposals would increase the tax to $1.60 per pack.

For many, excise taxes on cigarettes are easy to support — they tax a behavior detrimental to public health. Cigarette taxes are also one of few regressive taxes to receive support amidst a trend in the public debate to ask the wealthy to contribute more. Opponents argue on economic paradigms that tax evasion will increase and question the validity of the revenue estimates. Few Minnesotans ever file (or are even aware of) the required tax form to pay the tax required on out-of-state purchases.

However, much of the debate fails to engage the real issue involved: What is the purpose of an additional tax on cigarettes? Implementing health policy through a tax that the general fund will rely on to pay for state programs jeopardizes the goal to reduce smoking.

If not linked to the concept of a “sin tax,” it is accepted that regressive taxes for the purpose of revenue collection merit no place in state policy. In this case, the policy may even lead to revenue shortfalls that could harm other policy goals.

In order to rectify the stratification of the debate, excise taxes on tobacco should be earmarked into treatment of and prevention of tobacco-related health problems — which by design should decrease revenues collected by the tax itself. The standard of judgment for the cigarette tax should be its effectiveness in reducing burdensome public health costs, not the revenue collected.