qwerty1500
07-21-2007, 07:33 PM
I've been giving some thought to the consequences of funding SCHIP with tobacco taxes and the regulation of tobacco by the FDA. Nothing happens in a vacuum. The question is ,,, in the long run, are these two decisions contradictory or complementary?
First, let’s get the short-run out of the way. Politicians in Congress see SCHIP as a major accomplishment that they can brag about in 2008 to the large majority of non-smoking voters who think they are getting something for nothing. In terms of government revenues for SCHIP, the dynamics of tobacco price, supply and demand probably won't become an issue before the 2008 election.
Let’s think about the long run.
Government has historically tried to outlaw potentially addictive behavior that is viewed unfavorably by voters. The prohibitions on liquor and gambling were withdrawn because social consequences, public attitudes and the need for tax revenues outweighed the desire to ban those behaviors.
Tobacco has been taxed for many years. Like liquor, the tax rate has been set to maximize revenues without significantly impacting consumption. That is what seems different about the proposed tax for SCHIP. It will make tobacco products very expensive and may put many retailers out of the tobacco business. Perhaps Congress is counting on the addictive qualities of tobacco to maintain the tax base in the long run. Or, perhaps Congress doesn’t care if it destroys the tax base.
Tobacco is the public scourge of the moment. I suspect that’s why Congress wants the FDA to regulate tobacco. It’s not inconceivable that, sometime after the 2008 election, the FDA may decide that it's their duty to completely prohibit the importation or sale of any tobacco products.
Why would Congress choose to enact a huge tax, on a product that many want to eliminate, as the primary funding source for a potentially popular program?
On the one hand, Congress could choose to override a future FDA decision to outlaw tobacco. This would maintain what was left of the existing tax base for programs they don’t want to eliminate. This would also be an unexpected benefit of tobacco taxes for those smokers willing to pay the price for legal access to these products.
On the other hand, given the trend of anti-smoking legislation, it seems more likely that FDA will have its way and Congress will simply look for a new group of taxpayers they can tax “for their own good.” Anything addictive will do.
State governments seem to have saturated the gambling market with every lotto game imaginable. Given the proclivities of the Congressmen I know and the probable public outcry, it seems that higher liquor taxes will not be on the Congressional radar. Something related to firearms or marijuana seems possible. Or, perhaps a junk food tax will allow Congress to fund these programs for a while with $15 Big-Macs and $20 bags of Cheetos.
I’m not sure where this little merry-go-round will end.
Damn martinis.
First, let’s get the short-run out of the way. Politicians in Congress see SCHIP as a major accomplishment that they can brag about in 2008 to the large majority of non-smoking voters who think they are getting something for nothing. In terms of government revenues for SCHIP, the dynamics of tobacco price, supply and demand probably won't become an issue before the 2008 election.
Let’s think about the long run.
Government has historically tried to outlaw potentially addictive behavior that is viewed unfavorably by voters. The prohibitions on liquor and gambling were withdrawn because social consequences, public attitudes and the need for tax revenues outweighed the desire to ban those behaviors.
Tobacco has been taxed for many years. Like liquor, the tax rate has been set to maximize revenues without significantly impacting consumption. That is what seems different about the proposed tax for SCHIP. It will make tobacco products very expensive and may put many retailers out of the tobacco business. Perhaps Congress is counting on the addictive qualities of tobacco to maintain the tax base in the long run. Or, perhaps Congress doesn’t care if it destroys the tax base.
Tobacco is the public scourge of the moment. I suspect that’s why Congress wants the FDA to regulate tobacco. It’s not inconceivable that, sometime after the 2008 election, the FDA may decide that it's their duty to completely prohibit the importation or sale of any tobacco products.
Why would Congress choose to enact a huge tax, on a product that many want to eliminate, as the primary funding source for a potentially popular program?
On the one hand, Congress could choose to override a future FDA decision to outlaw tobacco. This would maintain what was left of the existing tax base for programs they don’t want to eliminate. This would also be an unexpected benefit of tobacco taxes for those smokers willing to pay the price for legal access to these products.
On the other hand, given the trend of anti-smoking legislation, it seems more likely that FDA will have its way and Congress will simply look for a new group of taxpayers they can tax “for their own good.” Anything addictive will do.
State governments seem to have saturated the gambling market with every lotto game imaginable. Given the proclivities of the Congressmen I know and the probable public outcry, it seems that higher liquor taxes will not be on the Congressional radar. Something related to firearms or marijuana seems possible. Or, perhaps a junk food tax will allow Congress to fund these programs for a while with $15 Big-Macs and $20 bags of Cheetos.
I’m not sure where this little merry-go-round will end.
Damn martinis.