Forget Lotteries and Liquor Stores: State to Operate Tobacco Stores

April 1, 2008

State-run lotteries are certainly popular (42 states and D.C. have them), with Arkansas’s Lieutenant Governor Halter recently reviving the idea of starting a state lottery to raise money for scholarships. Legislators in that state have pledged to do him one better: rather than undertaking all the work needed to start up a lottery, they propose taking over a business that already exists in the state: selling cigarettes.

The legislative proposal would ban the sale of cigarettes by private vendors and open government-run and owned tobacco stores throughout the state, with a massive tax to raise scholarship money.

Of course, this plan will require widespread advertising, just like the advertising in states with lotteries. We would like to suggest the following slogan for the new Arkansas State Cigarette Advertising and Merchandising (A-SCAM) Agency: “Buy Arkansas State Cigarettes and light up a student’s education!” If that’s not catchy enough, perhaps the following jingle would suffice:

Buy Arkansas Cigarettes
and your ash will become cash!
For the students who want to read,
a puff is enough
to buy the books that they need!

We understand that some people will oppose this plan—people who don’t care about education, obviously. The naysayers might argue that tobacco sales and marketing is not an appropriate activity for state governments. Arkansas policymakers should respond with the same arguments that are used to defend state lotteries. Smoking is unhealthy, so why shouldn’t the state raise money from people stupid enough to engage in such a dangerous activity (just like gambling)? After all, if the tax code can’t be used to make moral judgments about which consumer goods are “stupid” or “wrong” and to punish citizens who purchase those goods, then what is it for?

Another benefit of this plan is that legislators will not have to call the revenue raised “tax revenue” or even acknowledge that the cigarette taxes are taxes. This means that legislators who want to raise taxes without their constituents’ knowledge will now have a handy way of doing so (and without violating that pesky no-new-taxes pledge!).

Opponents of this plan, just like opponents of lotteries, will no doubt claim that the revenue raised will be a form of regressive taxation disproportionately burdening the poor. They might even have the audacity to allege that the revenue from State Cigarettes might not be used entirely for education since earmarked revenue is fungible, including lottery revenue.

Pro-State-Cigarette policymakers should simply attack their opponents for not caring about education, which is the only thing that matters. Anyone who cares about raising money for Arkansas students will enthusiastically support any plan that lets the state run and advertise a monopoly business with a high, regressive tax (not accurately labeled a tax) on one particular, potentially unhealthy consumer good.

Relying solely on cigarette smokers might be a gamble, but isn’t it the only way to “light up a student’s education”?

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