Iowa is the latest state to put in place a cigarette taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. hike under the guise of funding new health care programs. From the Des Moines Register:
The price of cigarettes is climbing by a dollar a pack in Iowa as a result of a tobacco tax increase signed into law Thursday by Gov. Chet Culver.
Culver said the higher taxes will prod thousands of Iowa smokers to kick the increasingly expensive habit while raising money to expand health care programs. The new law will increase state revenue by nearly $130 million annually.
“We are sending a bold message … around the nation that Iowa takes the health of its people, especially its kids, seriously,” the governor said. “We will now be in a position to prevent the deaths of at least 20,000 Iowans, to help 20,000 people quit smoking and help prevent nearly 40,000 younger Iowans from taking their first puff of a cigarette.”
Once again, lawmakers are using the tax code to push their own agendas and moral views onto all citizens who supposedly live in a free society that values individual liberty foremost. We’ve seen it with special taxes on pornography, casinos, alcohol, plastic surgery, and the list goes on.
It’s a common occurrence for politicians like Culver to say that we are saving lives by raising cigarette taxes. But we could save lives by passing many different tax hikes. How about taxes on unhealthy cheeseburgers? Sound ridiculous? Just wait – they’re coming, and their advocates are using the exact same argument used by Culver.
On the other hand, by the governor’s argument, why doesn’t he just ban cigarettes? If smoking is so deadly and it’s somehow morally right for government to stop people from killing themselves, then why not save 100,000 Iowans instead of 20,000? Oh…that’s right — tax revenue. He wants to make those who continue to smoke pay more to fund programs that, for the most part, have nothing to do with smoking. It’s an easy political sell to impose taxes on smokers rather than raise taxes on everyone.
As we’ve said time and time again, there is absolutely no justification for imposing additional taxes on smokers solely for the purposes of raising additional revenue to fund general programs. If there is a true negative externalityAn externality, in economics terms, is a side effect or consequence of an activity that is not reflected in the cost of that activity, and not primarily borne by those directly involved in said activity. Externalities can be caused by either production or consumption of a good or service and can be positive or negative. from smoking, then the tax should be imposed for that reason only — no more or no less. (Note: If one is going to argue the Ramsey Rule, then he/she would also have to agree that gas and food taxes should be raised dramatically as these products are highly inelastic.)
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