Printer-friendly version Reader Comments

Taxing all tobacco products equally makes sense, but the cigarette levy is regressive.

May 5, 2009

The bad budget news keeps coming, and while Gov. Badacci has rightly said he would not support broad-based tax increases to make the numbers work, sin taxes and other small levies will no doubt be considered. Included in the discussion will be higher tobacco taxes, which usually make sense as public policy.

These pages have long supported higher cigarette taxes because they provide a steady and predictible source of state revenue and they discourage smoking, especially among teens. This year, however, our support of higher tobacco taxes is limited.

One idea that will get a hearing is to raise the tax on tobacco products other than cigarettes to bring those items in line with cigarette taxes. This makes sense.

Small cigars – barely distinguishable from cigarettes – and loose tobacco that can be rolled into homemade smokes are taxed at less than half the rate of tobacco sold as cigarettes. Raising the tax on non-cigarette tobacco is good policy, putting these products on the same footing as the most commonly used form of this deadly recreational drug.

But we are skeptical of a proposal to raise the tax on cigarettes themselves at this time.

There's no getting around the fact that the lower a person's income, the more likely they are to smoke. That makes tobacco taxes regressive. At a time of deep recession when lower-income families are under tremendous stress, it would be wrong to levy a tax that falls disproportionately on these people.

We say this understanding that, if past reactions to tobacco tax hikes are an indication, a $1 increase in the state tax would prompt about 5,400 adults to quit smoking and deter 8,800 young people from ever taking up the habit. That translates to 4,200 fewer tobacco-related deaths.

Compelling as that is, the timing for such an increase couldn't be worse in terms of its economic impact. Perhaps if the tobacco tax proceeds were given back in the form of a low-income tax credit, the economics could be made to play out differently.

But given the dire condition of the state budget – which has a $570 million hole in it – it's not reasonable to expect that the Legislature would hike the cigarette tax and then send the money out the door to help low-income Mainers.

Considering that reality, it's best that lawmakers equalize tabacco taxes for various products, but keep a hike in the cigarette tax off the table.