Florida’s new $1-a-pack cigarette tax has sent just the kind of strong anti-smoking message society needs to hear.
July sales dropped 17 percent compared to June, as the tax kicked in.

Lawmakers hoped the tax would beef up sagging state revenues.

The tax may not live up to its fiscal billing if sales drop enough, but it will still be a bargain if smoking drops, especially among price-sensitive kids.

With health care costs soaring and the nation convulsed by efforts to reform health insurance, healthy changes in living habits are crucial.

Eliminating smoking and obesity would improve our national health and cut costs.
They are matters of personal responsibility, of which we need a lot more.

Direct sanctions like taxes and educational outreach should be effected.

True, a lot of smokers are turning to Georgia or other cheaper sources in reaction to the tax. Let’s hope they grow weary of those efforts and quit, for their own good and everyone else’s as well.

Taxation on fatty foods is a lot less attractive.

It means too much government interference in decisions that are not always wrong, the way smoking is.

But insurance plans should start penalizing obesity.

We’re way past the time for pussy-footing.

The short story is that cigarette consumption appears to be trending down while cigarette tax revenue appears to be on track.

Everyone’s happy, right?

Mississippi has collected $36.8 million from the 50-cent cigarette tax increase that went into effect in May, according to data from the State Tax Commission. The state collected $4.7 million less than expected from raising taxes on stamped cigarettes waiting to be sold when the tax hike took effect.

But tax collections on cigarette stamps in July, the first month of the current fiscal year, totaled $9.2 million, which is fairly close to expectations. The tax hike from 18 to 68 cents per pack is expected to generate nearly $113 million this fiscal year.

Those results are bringing smiles from two groups – state legislators who need new revenues to balance the state budget in a tight economy and health-care advocates hoping that higher prices will prompt smokers to quit.

Smokers appear to be cutting back, at least for now. Health care advocates are hoping to eventually reap long-term results from the state’s first tobacco tax increase since 1985.

After years of opposition from Gov. Haley Barbour, the Legislature took recommendations from Barbour’s Tax Study Commission in crafting the tax hike.

In addition to the state’s cigarette excise tax hike of 50 cents per pack, the state on July 1 added another 25 cents a pack to cheaper cigarettes made by companies that didn’t participate in Mississippi’s 1997 settlement of a lawsuit against big tobacco companies.

The larger payoff to Mississippi taxpayers should come in the long haul. If cigarette consumption indeed continues to decrease because of higher retail prices attributed to the tax hikes, taxpayers should see a reduction in public health care spending for tobacco-related illnesses.

One wild card is the impact of the federal cigarette tax increase on consumption at the same time as Mississippi increased state smoke taxes. The federal government in April raised the cigarette tax from 39 cents a pack to $1.01 a pack to help fund a children’s health insurance program and boost efforts to curb smoking.

The combined impact of higher federal and state cigarette taxes could cause consumption – and tax revenue – to decline faster than Mississippi lawmakers had anticipated. That, in turn, could lead to higher taxes in other areas.

But reduced cigarette consumption should ultimately make that problem level out based on public health care cost reductions. For public health care advocates, less cigarettes tax revenue would be an excellent problem to have because they believe the state can more than recoup any loss in health care costs savings. That would be healthier for everybody.

Question: When is a cigarette tax not a tax? Answer: When the city of San Francisco calls it a “fee” to pick up discarded cigarette butts, instead. Members of the International Premium Cigar & Pipe Retailers Association have a better idea.

The city’s Board of Supervisors unanimously passed a scheme this week to add a 20-cent ‘fee’ onto a pack of cigarettes effective Oct. 1. State law says cities cannot tax cigarettes. So, Mayor Gavin Newsom and the Supervisors positioned the tax as a ‘fee’ to help offset the $7.5 million they say it spends every year picking up spent butts.

“How double-dealing can you get?” said Chris McCalla, legislative director of the IPCPR. “If the public is going to let them get away with that, perhaps they’ll like this idea even better: Make the 20-cent per pack ‘fee’ a deposit of one penny per cigarette. Then, homeless or other people could collect the butts as they do bottles and cans which could be redeemed for money.

“That would accomplish two things: it would provide income for people who really need the money and it would help keep San Francisco streets and sidewalks clean,” said McCalla with his tongue planted firmly in his cheek.

“Unfortunately, a lot of San Francisco businesses and the city will suffer because of this so-called fee. Any business in the city that sells cigarettes and doesn’t object to this 20-cent per pack ruse has only itself to blame when their businesses tank and they have to lay off their employees or close their doors,” said McCalla.

William F. Shughart III of the Tax Foundation – an independent, non-partisan educational organization – supported McCalla’s position by saying that “former Washington, D.C. Mayor Marion Barry… thought he could solve his city’s own budget problems by raising its excise tax on gasoline by five cents per gallon. He was forced to rescind the tax increase within a month when revenue losses made it obvious that residents and D.C.-bound commuters were filling up their tanks in the Maryland and Virginia suburbs.”

The IPCPR is an association of more than 2,000 cigar shop owners and manufacturers and distributors of premium cigars, pipes and pipe tobacco and related items. For the most part, these are small, family-owned businesses that employ tens of thousands of people and generate millions of dollars in state, federal and payroll taxes.

And soon, apparently, fees in San Francisco.

A projected revenue increment of P19 Billion is expected to be generated from the proposed reform for the excise tax on tobacco and alcohol products.

The Department of Finance (DOF) deems it necessary to push for the passage of the reformed excise tax on alcohol and tobacco products to correct the weaknesses of the Republic act 9334.

The DOF believes that pursuing the reform under one bil is better for the following reasons: a) serves the objective of ensuring that the same direction of reform is maintained for both the tobacco and alcohol excise taxes; b) allows greater flexibility on the part of government to restructure the exise taxes in such manner that is acceptable to the industry players without necessarily compromising the revenue objective of the reform; and c) a single bill is more manageable in terms of shepherding the reform to ensure that any proposed changes to the DOF proposal will not compromise the revenue objective of the reform.

The reform stemmed from what the DOF pointed out as weaknesses of the current multi-tiered system which is prone to downshifting/misreporting of consumption from high-priced and high-taxed brands to low-priced and low-taxed brands resulting in lower revenues.

The DOF emphasized that there is a need to reform the current excise structure in order to align tax rates with that of neighboring countries as the Philippines has the lowest excise tax rates among Asian countries.

Other reasons to reform are to compensate for forgone revenues resulting from the implementation of certain laws, e.g., lower corporate income tax, higher personal exemption, tax incentives under the PERA law and the National Tourism Policy Act; and to improve the overall credit rating which comes along with improved revenue position.

The DOF proposal is being sponsored by Representatives George Arnaiz, Pryde Henry Teves, and Jocelyn Limkaichong under HB 6079.

While HB 6079 is still pending at the House Committee on Ways and Means, the DOF proposal is sponsored at the Senate by Senator Panfilo Lacson under Senate Bill No. 2980 is still subject for committee hearing.


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