Taxing Smokers Does Not Show Support of Education

As first appearing in the Columbia Daily Tribune:

These days there are a lot of calls to make people pay their “fair share,” and no, we are not referring to the 1 percent. We are talking about smokers. The argument for raising the tax on cigarettes is straightforward—smoking is harmful to individuals, and though smoking is an individual decision, it impacts each of us. We all bear the brunt of additional health care costs incurred by smokers. These are what economists call negative externalities. They are, in theory, why smokers should be taxed more for their behavior—to offset their costs to society. Most proposals to raise the cigarette tax, however, seek to tax smokers to pay for unrelated programs, such as education.

For example, Erin Brower of Raise Your Hand for Kids is seeking to put a 50 cent increase on the ballot to fund early childhood programs. Missouri Treasurer Clint Zweifel has proposed an increase to fund college scholarships, an idea Missouri Attorney General Chris Koster supports. In a recent special to the Joplin Globe, Koster called for a 73 cent per pack increase. These are certainly not the first calls for increasing the tax. In the past 15 years, tobacco tax increases have appeared two times on the ballot. Each time Missouri voters have had the opportunity to tax smokers more, they have failed to do so. Why?

First, Missourians are leery of using “sin” taxes to fund other programs, especially education. This was the same tactic used to legalize gambling in Missouri. Lawmakers said the revenue from gambling would go to education. They did not tell voters, however, that the money would supplant not supplement existing funds to education. There are fears that the same would happen with proposals to raise tobacco taxes.

Second, using tobacco taxes to fund other programs simply does not make economic sense. Missouri’s lowest-in-the-nation tobacco taxes help draw in an untold number of shoppers across state lines, especially in Kansas City and along the Illinois border. These shoppers make it a point to buy their cigarettes in Missouri, thus creating sales for our local businesses and generating tax revenue for the state. Raising the tobacco tax would deter these shoppers.

Tobacco taxes also have the negative distinction of being one of the most regressive taxes. Smokers tend to be from lower-income households. At the same time, middle-income families would benefit from many of the programs created from increased tobacco taxes, such as college scholarships. Thus, if Zweifel and Koster’s proposal was implemented, low-income families would be subsidizing the college education of middle-income families. What is the “fair share” for smokers to pay for a middle-class student’s college education?

The truth of the matter is that smokers are an easy group to target. Few, except for other smokers, are sympathetic to their plight. At the same time, we all support better educational opportunities for Missouri students. Therefore, taxing smokers is a relatively easy way to raise taxes to fund educational programs.

If lawmakers are seriously concerned about the negative externalities causes by smokers, they should direct tobacco tax revenue directly back to smoking prevention programs and the Medicaid costs for smokers. That is the only logically and economically consistent use of the tax revenue.

James V. Shuls, Ph.D., is an assistant professor of educational leadership and policy studies at the University of Missouri–St. Louis and a fellow at the Show-Me Institute, where Michael Rathbone is a policy researcher.