Cigarette smokers’ warning: ostensibly anti-tax Republicans can be hazardous to your fiscal health.
To be a smoker in America today is to be constantly kicked to the curb — literally. A man with nicotine-stained hands cannot walk into an office building, a shopping center, and increasingly even the local watering hole without being reminded he is not welcome. To that list of indignities, smokers can add another: they can’t count on Republicans to keep their taxes low.
Exhibit A is Mississippi, where the cigarette tax — the third lowest in the nation — hasn’t gone up since 1985. Today it will rise a whopping 50 cents a pack, thanks to a bill signed into law by Republican Gov. Haley Barbour. When a former tobacco lobbyist in the Deep South who has twice vetoed cigarette tax increases is now open to them, smokers aren’t safe anywhere.
Barbour isn’t an insignificant figure in the GOP. The former Republican National Committee chairman is an active participant in House Minority Whip Eric Cantor’s national council for rebuilding the party’s brand, is slated to run the Republican Governors Association in 2010, and is talked about as a presidential candidate in 2012. Reports that Barbour will visit Iowa in late June have fueled the White House speculation.
Political scientist Marty Weisman of Mississippi State University is already comparing Barbour to the anti-tax activists’ least favorite Republican presidential candidate from the last go-around: Mike Huckabee. “Huckabee lacks favor with a lot of Republicans because, though he’s 100 percent Republican, he raised taxes several times in Arkansas,” Weisman told the Associated Press. “I believe the eyes of the nation are on Barbour.”
And what was one of Huckabee’s favorite taxes to raise? You guessed it: the levy on cigarettes. Nonetheless, Barbour has plenty of company among leading Republicans. Florida Gov. Charlie Crist — a 2012 possibility and declared candidate for U.S. Senate in 2010 — has said he will sign a bill raising the cigarette tax by $1 a pack. The measure will also nearly triple the existing tax on the wholesale price of other tobacco products.
The $1 billion tax hike on cigarette, pipe smoke, and chewing tobacco comes at a time when Crist’s anti-tax credentials might come in handy against a more conservative primary opponent. “He is a fiscal conservative who is a libertarian on many social issues,” a Crist ally told the Orlando Sun Sentinel. “He’s never going to win over the far-right-wing social activists, but he’s with 95 percent of the Republican Party, and being against tax increases is the most fundamental thing.”
Oops. To be fair, Crist has plenty of Republican cover. There were members of his party in the legislature who took a more proactive role in pushing for the tax increase. Ultimately, it was passed by two Republican-controlled chambers, with one unanimous state senate vote for a bill containing the tax hikes.
Not every Republican mentioned as a potential 2012 presidential contender wants to slam extra taxes on a pack of smokes. Louisiana Gov. Bobby Jindal is holding firm in his opposition, though so far the relevant committees in the state legislature have managed to block it without any veto being required. South Carolina Gov. Mark Sanford has opposed cigarette tax increases that were intended to expand Medicaid, though he is willing to raise the tax by 30 cents a pack to help pay for an optional flat tax that would cut participants’ income tax rates by nearly 50 percent.
Sanford communications director Joel Sawyer explained the distinction to TAS. “If a cigarette tax increase does what it is supposed to do, the resulting reduction in smoking will lead to decreased revenues,” says Sawyer. “So you are proposing to pay for permanent spending increases with temporary revenues.” But he argues that partly offsetting an income tax cut with a higher cigarette tax is revenue-neutral and shifts the tax burden away from income to consumption.
Grover Norquist, president of Americans for Tax Reform, told TAS that is consistent with the Taxpayer Protection Pledge. “We would prefer an income tax cut without any offsetting excise tax increase on anybody,” Norquist says. “But tax reform — moving from one tax to another — does not violate the pledge.” Raising the cigarette tax without any compensatory tax cuts in order to finance increased government spending, however, does.
Mississippi’s cigarette tax hike will go toward defraying the cost of car tags, even though Barbour had initially recommended against using the revenues for any specific purpose. Americans for Tax Reform has been opposed to Florida’s increase because, as Norquist puts it, “they are raising the cigarette tax because they don’t want to cut spending.”
What about the public-health argument in favor of reducing smoking? “That’s great,” says Norquist. “Then cut other taxes. Otherwise, you just want the revenue for spending.” Norquist agrees with Sanford’s team that using higher cigarette taxes to pay for permanent spending increases will lead to additional increases in the tax burden as revenues decline with smoking. “Raising the cigarette tax today means raising the income tax or some other tax at some point tomorrow,” he concludes.
Cigarette smoking is unhealthy and unpopular, so smokers are an easy target for politicians who find taxes and spending as addictive as nicotine. But as Republicans try to regain their fiscal senses and provide a compelling alternative to President Obama’s big-government agenda, where they stand on the most popular of tax increases may help determine who is serious about limited government — and who’s just blowing smoke.
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