As much as Maine celebrates its falling rate of smokers, Gov. John Baldacci’s budget shows the extent to which the state depends on them continuing their habit. He is proposing a $1-per-pack tax increase on cigarettes to raise an additional $130 million over the biennium. Democratic leaders are saying this isn’t likely, marking the second time recently that this added tax has potentially come and gone.
It’s time for Maine to take a broader view of what it wants from tobacco.
Taxing cigarettes usually is a safe way of raising revenue because most people (75 or 80 percent) don’t smoke, and taxing the minority is politically more expedient than taxing the majority; smoking is seen as an optional habit, though the extensive anti-smoking infrastructure in every state suggests the opposite; and smokers who depend on public health care services are accused of generating more costs than they deliver in tobacco tax revenues, even though the budgets of few other government services are balanced this way.
The argument that raising the price of cigarettes causes people, especially price-sensitive young people, to quit smoking may be true. But if it is, raising taxes as high as possible while not relying on a single penny of revenue from tobacco is the only sensible course for the state. But the administration is doing neither.
The money would go into the General Fund, with about 5 percent identified for smoking cessation and the rest up for grabs, though the increase in K-12 education funding could use all of it and more. A reason these spending options are available, however, is that the governor chose to ignore his own commission’s recommendations on funding his Dirigo Health program. It too wanted to use sin taxes – alcohol as well as tobacco – to meet the governor’s desire to end an insurance-company payment to Dirigo that was making his life unpleasant.
Dirigo got nothing, and now the governor’s budget faces an obvious problem. When asked this week about the $1 increase, which would give Maine, at $3 per pack, the highest tax of any state, House Speaker Glenn Cummings and Senate President Beth Edmonds said they did not think it could pass, and would have particular trouble in the closely divided Senate. That is primarily because leadership wants the budget to pass by a vote of two-thirds of the Legislature, giving both parties the responsibility of presenting a strong spending plan for the state. But Republicans have little to gain by agreeing to higher taxes, even those on tobacco.
There is little sympathy among nonsmokers about the high cost of cigarettes, but that doesn’t mean smokers should be targeted at tax time. In fact, it puts an added responsibility on lawmakers to treat smokers fairly. The governor and legislators would do well to examine what they want from a cigarette tax, where they want it to rank compared with other states, and how, if at all, the money it raises should be spent given the possibility the revenues could dry up.
There’s nothing wrong with taxing this dangerous product, but it shouldn’t be seen as Maine’s Tobacco Treasury.
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