When I first heard about the tax increase on tobacco that will go into effect on April 1, 2009, I thought this just affected those who smoke.

When the tobacco tax increase for child health care went into effect here in Arizona on January 1, 2007, Arizona became the fourth highest state in the nation for tobacco tax. When The Children’s Health Insurance Program Reauthorization Act of 2009 goes into effect next month, smokers in Arizona and nationwide will be paying much more to smoke.(1) In Arizona as well as nationally, the new tax will increase some tobacco products by more than 2000 percent.

Although this is written from the viewpoint of someone from Arizona, taxing tobacco by so much will bring unintended consequences to Arizona and to the nation as a whole:

Smuggling Across the Mexican Border

Arizona has many problems related to drug smuggling and Phoenix is now second in kidnappings in the world.(2) When the tobacco tax goes into effect next month, this new tax will raise the actual price of a one-pound bag of tobacco from about $15 per pound to $40 per pound thus raising the actual cost for a one-pack-a-day smoker from $30 per month to $80 per month. That will make tobacco smuggling from Mexico much more profitable and the crime we have here will only increase.

The Arizona Department of Revenue website states that “cigarette and tobacco product tax evasion is accompanied by an increase in thefts, hijackings, and cross-border smuggling, counterfeit cigarettes, and black market sales”.(3a) What money is made in increased taxes from tobacco may well be paid out in increased costs for enforcement and to combat crime involved with tobacco smuggling. Arizona is already set up to recover revenues lost to tax evasion(3b) and the federal government will begin a study to determine the loss of revenue to tobacco smuggling across the border and how to recover lost revenue from cigarette smuggling from Mexico.(4)

Increased Cost in Mental Health Care

Cigarettes are often used as a way of self-medicating by people who have anxiety and/or depression. And when they quit smoking, a significant number of people who have major depression will have a new depressive episode.(5)

Major depressive disorder is the leading cause of disability in the U.S. affecting 1 in 5 families nationwide. An estimated 1 in 4 adults has a diagnosable mental disorder.(6) Yet funding for mental health in Arizona has been cut. Healthy Families (a program to help families dealing with depression and domestic violence) has been eliminated statewide.(7a) And people who have lost their jobs often lose their health insurance. As a result, our hospitals and emergency rooms and/or prisons will be the more expensive alternative. Since the closing of mental hospitals in the 60’s, jails and prisons throughout the U.S. have become our nation’s largest psychiatric facilities. (8)(9)(10)(11)

Increased Domestic Violence

Particularly during this time of economic difficulty now may not be the time to quit smoking, especially when it is not out of choice. With many people out of work and few jobs available, the result may well be increased domestic violence. According to some sources there already is an increase in domestic violence due to the economy.(12) Add to that people being forced to quit because they cannot afford it and this is a recipe for disaster. And yet, a few months ago the Maricopa County Tobacco Prevention Program stopped offering stop-smoking classes. And the mental health funding of Healthy Futures here in Arizona has been drastically cut.(7b) Further, when people lose their jobs and also lose their health insurance, counseling may be financially out of the question.

Otherwise Law Abiding Citizens Could Become Criminals

People who smoke and who now cannot afford it will try to find ways to continue smoking. It may be as simple as crossing a state border, ordering tobacco products from another country such as Canada or even buying cigarettes on the black market.

According to the Arizona Department of Revenue “under Arizona Revised Statutes 42-1127 any person who evades the reporting, assessment or payment of cigarette or tobacco product taxes that would otherwise be due may be guilty of cigarette or tobacco tax evasion. Violators are subject to fines and/or jail time”.(3C) As a result, normally law-abiding people who are not criminals may unintentionally become criminals. Yes, ignorance of the law is no excuse; however, these laws have not been well publicized. And although it is doubtful that anyone would go to prison for avoiding the tax, some teenagers may be the unwitting buyers who could end up with a conviction on their record for the rest of their lives.

This may sound far-fetched; however the result of excessive tobacco tax may be that “law-abiding citizens learn to break the law routinely, and states respond by adopting intrusive and sometimes abusive tactics to catch them”.(13)

The United States already spends $200 billion dollars per year to keep people in prison. (14b) Approximately half of those incarcerated are non-violent offenders.(15) Today 1 in 100 adults in The United States is incarcerated(16) and as many as 31 in 100 are currently either in jail or on probation.(17) As a society we do not need to increase the number of people in jail because of non-violent offenses. And we do not need to add more to our already overburdened courts. We simply can’t afford it.

Prohibition Doesn’t Work

With the taxes on tobacco being raised so high - in essence, this amounts to prohibition - particularly for the poor and those on a limited budget. We learned (or should have learned) when alcohol was prohibited in the U.S. that morality and/or personal choices cannot be legislated. Experience has shown that prohibition didn’t keep many from using alcohol, but only created criminals out of those who continued to use the substance. Bathtub gin not only was illegal, but made many sick. And Prohibition created an opportunity for anyone who found that selling illegal alcohol paid off.

“Violence was common in the alcohol industry when it was banned during Prohibition, but not before or after. Violence is the norm in illicit gambling markets but not in legal ones. Violence is routine when prostitution is banned but not when it’s permitted. Violence results from policies that create black markets, not from the characteristics of the good or activity in question.” (18a) As shown during Prohibition, the cost to society as a whole was immense.

The Tobacco Tax Will Not Sustain SCHIP

Although the proponents of the tobacco tax say this tax on tobacco products is a stable source of income, according to the Heritage Foundation, 22.4 million new smokers will be needed by 2017 in order to produce the revenues that Congress needs to fund SCHIP. (19)

The tobacco manufacturers have increased the addictive substances in tobacco over the years. Menthol cigarettes have been found to be most addictive - yet those are marketed towards teens. (20) However, with the new tax, quite a few people will not be able to afford to continue to smoke and will quit. Thus the way to get 22.4 million new smokers very possibly could be through more aggressive advertising towards teens.

Few people get through life without making some choices that affect their well being or cost society in one way or another - whether it be eating or drinking too much, driving too fast, not exercising or being financially irresponsible. But when any minority population is taxed excessively, the consequences to Arizona and to our nation may be much more than what was intended.

1. Alcohol &Tobacco Tax & Trade Bureau http://www.ttb.gov/main_pages/schip-summary.shtml

2. Brian Ross, Richard Esposito and Asa Eslocker, “Kidnapping Capital of the U.S. A”, Feb 11, 2009, ABC News abcnews.go.com/Blotter/story?id=6848672&page=1.

3. Arizona Department of Revenue www.azdor.gov/criminalinvestigations/Tobaccomenu.htm

4. Children’s Health Insurance Program Reauthorization Act of 2009, Section 703 www.govtrack.us/congress/billtext.xpd?bill=h111-2

5. Arizona Smoker’s Helpline “Ashline Quit Facts”
www.ashline.org/downloads/factSheets/depression_000.pdf

6. National Institute on Mental Health www.namiwnc.org/facts.html

7. Michelle Reese “DES Cuts Mean Children’s Services Slashed” Feb. 21, 2009 East Valley Tribune
www.eastvalleytribune.com/story/135783

8. Adam Liptak “1 in 100 U.S. Adults Behind Bars, New Study Says” Feb. 29, 2008, New York Times
www.nytimes.com/2008/02/28/us/28cnd-prison.html?_r=1

9. Bernard E. Harcourt “Mentally Ill Behind Bars Jan. 15, 2007 University of Chicago Law School
http://www.law.uchicago.edu/news/harcourt-mentally-ill-prisoners/index.html

10. Joanne Mariner.. “Prisons as Mental Institutions” Oct. 27, 2003
http://writ.news.findlaw.com/mariner/20031027.html

11. Mindy Herman-Stahl, Marni L. Kan, and Tasseli McKay, “Incarceration and the Family: A Review of Research and Promising Approaches for Servicing Fathers and Families”, Sept. 2, 2008
aspe.hhs.gov/hsp/08/MFS-IP/Incarceration&Family/ch2.shtml

12. Sally Kalson, “As economy falters, rise seen in domestic violence” Nov. 2, 2008. Pittsburg Post Gazette
www.post-gazette.com/pg/08307/924499-51.stm

13. Richard E. Wagner, Ph.D., “State Excise Taxation: Horse-and-Buggy Taxes In an Electronic Age” The Tax Foundation
http://www.taxfoundation.org/publications/show/522.html

14. “Facts About Prison System in the United States”, October 2007
webb.senate.gov/pdf/prisonstwopager.html

“Mass Incarceration in the United States: At What Cost?”, October 4, 2007, U.S. Joint Economic Committee Hearings, Washington, DC
http://jec.senate.gov/index.cfm?FuseAction=Hearings.HearingsCalendar&ContentRecord_id=7a22e2ab-7e9c-9af9-7bb7-4a1b88554f61&Region_id=&Issue_id=
15. Bureau of Justice Statistics Criminal Offender Statics www.ojp.usdoj.gov/bjs/crimoff.htm

16. Adam Liptak “1 in 10 U.S. Adults Behind Bars, New Study Says” Feb. 29, 2008 New York Times
www.nytimes.com/2008/02/28/us/28cnd-prison.html

17. “One in 31 U.S. Adults are Behind Bars, on Parole or Probation” The Pew Charitable Trust
http://www.pewtrusts.org/news_room_detail.aspx?id=49696

18. Jeffrey A. Miron, CNN Editor’s note: Mar 24, 2009
www.cnn.com/2009/POLITICS/03/24/miron.legalization.drugs/index.html

19. Michelle C. Bucci, William W. Beach “22 Million New Smokers Needed: Funding SCHIP Expansion with a Tobacco Tax” July 7, 2007 Heritage Foundation
www.heritage.org/research/healthcare/wm1548.cfm

20. Kreslake JM, Ferris Wayne G, Alpert HR, Koh HK, Connolly GN. “Tobacco industry control of menthol in cigarettes and targeting of youth and young adults”, American Journal of Public Health, 2008; 8(9):1685-92

Courtesy: www.Headsupusa.com