The regression begins

And before the Maryland General Assembly has even met!

This week a group billing itself as the “Healthy Maryland Initiative” announced its support for a $1 per pack increase in the state’s cigarette tax, which would double if the proposal is enacted. Currently the $1 per pack tax is ranked about the middle of the pack (no pun intended) as far as state cigarette taxes go, but an increase of this magnitude would skyrocket Maryland to a top-5 spot in the country (along with Maine, Michigan, New Jersey, and Rhode Island.)

The reason I entitled this “The regression begins” is that a tax of this sort is probably one of the most regressive taxes around, as cigarette smokers generally can be found among the middle-class and lower on the economic ladder and that additional dollar is a larger proportion of their income. Buying a carton of cigarettes would mean another Jackson leaves their wallet.

According to the HMI group, the tax would raise about $211 million, which they claim would insure an additional 62,000 Maryland residents. However, this is still a small portion of the estimated 788,000 uninsured in the state. They also boast that there will be 50,000 fewer teen smokers as a result of this taxation. In our area, there will simply be several thousand more trips across the Delaware border to buy cigarettes, which will hurt the businesses on this side of the “old line”.

Some may recall that onetime candidate for governor Doug Duncan was also in favor of a similar tax, which was proposed in the 2006 General Assembly but didn’t make it out of committee. (The numerical data being used was that prepared to calculate the financial impact of the bill when it was introduced.)

And I have the same questions now that I did when the would-be governor proposed the tax hike:

Does it not seem strange that on the one hand your plan would “save 50,000 Maryland children from tobacco addiction” yet it’s totally dependent on a new additional cigarette tax?

Secondly, does your estimate of $211 million in revenue from the tax account for a probable reduction in the number of smokers as cigarettes get more expensive?

And if the revenue doesn’t get totally generated, where would the shortfall be made up – additional taxes on working Marylanders or cuts in the programs?

Other aspects to the second question I didn’t think of at the time were regarding a possible increase in criminal activity as cigarette smuggling becomes a more profitable opportunity; and also the subject I touched on earlier about business crossing state borders. Maryland is a long state but not particularly wide, and it’s very tempting if this tax becomes law to save anywhere from 65 cents to $1.68 per pack depending on location. (Pennsylvania is the border state with the highest per-pack tax, $1.35; Virginia’s ranges from $0.32 to $0.45 depending on jurisdiction. Delaware and West Virginia are both 55 cents per pack.)

And obviously the best-laid plans generally fall short when they come to estimating government revenues from new taxes. (They always seem to underestimate spending as well.) That $211 million may well turn out to be more like $180 million – then where do they get the money? I never got answers to any of my questions and I doubt anyone in the HMI group will answer them now either.

In the interest of disclosure, I’m not a smoker who would be affected by this tax insofar as I don’t purchase cigarettes, mainly because I have a mild (but controlled) affliction of asthma. This is a stand on principle. It has always puzzled me as to why we have on the one hand government spending all this money telling people not to smoke (as do the cigarette companies which REALLY blows me away.) But, rather than just be logical and ban smoking as they do with hard drugs, they tax the crap out of tobacco and have become dependent on that revenue as well as the money they extorted from tobacco companies as part of their legal settlement.

For his part, Governor-elect O’Malley has remained coy on the subject, as spokesman Rick Abbruzzese noted, “We’re not inclined to support it at this time. The governor-elect is primarily focused on building a professional and competent state government.”

Leaving aside my opinion that we just threw out a “professional and competent state government”, something tells me that when O’Malley and his minions start adding up all of his promised spending, there’s going to be a change of heart the moment that additional cigarette tax makes it out of the General Assembly. Remember, they only said that they would not support it “at this time.” Times do change, and I’ll bet O’Malley’s mind will as well. He knows that it’s only 2007 (not 2010), and people have short memories when it comes to political promises kept and broken.

Author: Michael

It's me from my laptop computer.