New Taxes

There are so many reasons I’m glad I don’t smoke … at least not the 2 packs of cigarettes I used to burn up every day.  It was back in 1987, I think, that I threw them away and never looked back.  Some people can tell you the exact day and time they smoked their last cigarette, but I just vaguely remember one day deciding I didn’t want to smoke any more, and pitching them.  I still have an occasional cigar … maybe 5 or 6 a year … so I can’t say I’m tobacco free.  But that’s an indulgence, not a habit.

But Wednesday, a tobacco tax increase … from 39 cents to $1.01 per pack goes into effect nationwide, which will bring the MSRP on most cigarettes to $5.00/pack.

For me, that would have been a $10.00-a-day habit.  $300.00/month. Almost $3600.00 a year.  Ouch!

The tax increases will affect cigars, pipe, and smokeless, tobacco as well.  But again, my indulgence is just that.  I can afford to pay a little more tax on an indulgence.

The tax increase is intended to fund SCHIP, the State Children’s Health Insurance Program.   Since so many health problems are associated with smoking, maybe that’s a good thing.  And maybe it will encourage some to stop and others not to start.  I’m not a big opponent of sin taxes, though with a major cigar manufacturer in town, they may certainly feel the pinch if fewer people smoke.  Cigarettes, cigars, smokeless and pipe tobacco are legal products, but taxes have been used to influence behavior as long as there have been taxes.  Ever will it be thus.

An idea could possibly have less support is a proposal working it’s way through the Florida legislature to lift the tax exemption on bottled water.  Governor Crist is proposing that a 6 cents per gallon tax be imposed on bottlers taking water from the Floridan aquifer … and exemption that dates back to the 1940’s. Lifting the exemption could bring $40 million dollars to the state, which is facing a $6 billion dollar deficit.

Such taxes are rarely paid by businesses.  The are commonly passed along to the end consumer as a cost of doing businesses.  There are dozens of such exemptions on the books in Florida … on such things as ostrich feed and some “luxury” items like Super Bowl tickets and seats in skyboxes.  However, there is a body of thinking that says raising taxes during a recession can be counter-productive to a recovery.

Still, at both the national and state levels, something has to be done.  In an economy like this one, people look to government to “do something”, and often that requires spending money … money that right now the government said it doesn’t have.  The federal government can run a deficit, and it’s currently projected to run into the trillions in the next several years.  The state doesn’t have that luxury.  The state constitution requires a balanced budget, and while some say there is still plenty of fat to be cut, others will tell you fat, meat, sinew, and bone have already been sliced.

The truth as usual, probably lies somewhere in the middle.  It would seem some tax increases are inevitable.  On the other had, they’re so politically unpopular, they’ll likely be kept to a minimum.  Whether that’s the right path, a journalist would tell you … remains to be seen.

Sig

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Filed under Government, Politics, Taxes, Thoughts

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