Monday, April 02, 2007

Monday of Holy Week

The Governor's sin-tax double standard

Governor Phil Bredesen presented his tobacco tax hike proposal (to support education, he says) to the General Assembly as both a way to support and enhance Tennessee's education system as well as to encourage people to stop smoking. When people begin to ask the legitimate question of "what happens to the revenue stream if people do stop smoking," then the Governor, his staff, and his legislative allies begin to backpedal and say that the revenue stream won't really stop-after all, this is Tennessee and people are not really going to stop using tobacco products.

The Governor's latest change in mentality (one of many throughout his administration) might have some basis in reality were it not for the fact that he is also pushing for a statewide smoking ban, and I can guarantee that this will cause many people to quit by virtue of the fact that they will not be able to smoke anywhere in the State outside of their own home.

The smoking ban, sponsored in the House by Democratic Leader Gary Odom, and in the Senate by Knoxville's very own RINO Sen. Jamie Woodson, would effectively make it illegal to smoke anywhere in public would almost certainly convince Tennesseans to kick the habit by the millions. While the American Lung Association might be happy about this, no one has managed to explain just how it is the State will replace the massive amount of lost revenue should the ban pass.

If businesses want to vonluntarily ban smoking on their premeses, more power to them. Many businesses have done so without seeing a substantial loss in revenue. The State can ban smoking in State buildings-again, fine-the State ought to have that kind of control over its own facilities if it so wishes. However, for the State to uniformly impose a smoking ban on all businesses in Tennessee without the consent of all business owners is nothing short of fascism. It is telling business owners that they may own the business, but the State really has total control over them. Businesses ought to have the choice whether or not to ban smoking. If the people want businesses in their town to be smoke-free, it will be so if people let that be known-that is what free-enterprise is all about.

In addition to the smoking ban, which also increases the cigarette tax within the text of the bill, a related piece of legislation would raise the tax on chew and snuff from 6.6% to a whopping 25 cents per ounce. A quarter an ounce is nothing short of tyranny and is highly reminiscent of the Stamp Act and the Tea Act in colonial times. Nonetheless, this would be less of a problem if the Governor actually favored a real tax swap.

When people here in White Pine (where tobacco is the number one cash crop) talk about this legislation, they say they are for it, but there is one major caveat-nearly everyone I have spoken with about these bills is operating under the mistaken belief that the grocery tax will be reduced by an amount corresponding to the increase in tobacco taxes. As soon as it is explained to them that this will not be the case, and that so far the only proposed reduction in the grocery tax is 1% (a paltry sum compared to the level of the tobacco tax increase) , then folks' tune changes very quickly indeed. People in places far from Nashville still have the idea that an increase in sin taxes will mean an equal decrease in food taxes. The Governor is now openly selling his tax hike as something that will not only increase revenue in the short term, but as something that will continue to massively increase revenue. If this is the case, the State needs to quit spending any funds to try and get people to stop smoking-it needs the revenue flow to be maintained.

Thankfully, neither the smoking ban/cigarette tax hike, or the snuff and chew tax increase have gotten anywhere in committee yet. Unless the Governor is ready to talk about equal and corresponding tax trade-offs, we ought not pass his latest tax hike-not with a $500 million dollar surplus.



At Monday, April 02, 2007 3:19:00 PM, Anonymous Anonymous said...

great post, TPB has another good roundup ( While you're there be sure to check out the bit about elizabethton's rep....


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