Massive Tax Hike On Tobacco Goes Into Effect Tomorrow
Ostensibly to pay for the expansion in the Child Health Insurance Program, but we all know that’s not actually going to work.
The federal cigarette tax goes from 39 cents to $1.0066 per 20-cigarette pack tomorrow. The increase, as we noted in February, was coupled with an expansion of the federal children’s health care program.
...a politically popular and expensive program should never be funded by a small, low-income, politically unpopular minority like cigarette smokers. Just because the government needs revenue to fund some general spending program that has broad benefits doesn’t mean that an arbitrarily selected group of people should pay the tax. Popular, expensive, broadly available public programs should be paid for with broad-based taxes on income or consumption.
The problem with paying for expensive, but “politically popular,” social programs with broad-based taxes is that once the majority of taxpayers realize how much the program in question is going to cost it usually loses a lot of its political popularity. That’s why, in order for the government to get its foot in the door with these sorts of program, they start out with a narrowly-defined tax on an unpopular group of taxpayers (smokers, “the rich,” etc.).
Of course, that narrow tax base is unlikely to produce enough revenues to support a massive entitlement expansion, but that’s not the point. Once the program is in place it isn’t going anywhere, and its easy enough for politicians to raise other taxes to cover shortfalls.
It’s just another way in which the government grows itself in a pervasive, and fundamentally dishonest, manner.
