COLUMN: Iowa’s salvation seen through the smoke
January 24, 2003
In recent days, Iowa Attorney General Tom Miller has proposed to the Iowa Legislature to raise cigarette taxes by 25 cents in order to further fund drug treatment and prevention programs. The legislature is expected to deliberate and vote on this issue in the near future. While raising the cigarette tax is a splendid idea that I am 100 percent in favor of, I feel the funds generated could be utilized in a much more useful fashion.
First of all, why stop at 25 cents? In my short experience both buying and selling cigarettes, I have discovered people will pay almost anything to satisfy a craving. Nicotine, being a very addictive drug, has the power to drive even the strongest-willed, levelheaded person to irrational states of existence, myself included. So why stop at 25 cents when that amount could be multiplied five-or six-fold?
According to the Federation of Tax Administration and www.taxadmin.com, New York and New Jersey tie for first in the nation on cigarette tax at a whopping $1.50 per pack. This means that if a pack sells for an average of $3-4.50, these states can charge 33-50 percent tax and see no significant revenue declines in cigarette sales.
So where does Iowa fall in these rankings? At 36 cents a pack, we are stuck in the middle at 27th. Even a 25-cent increase would only raise our position by a measly 8 places.
So my suggestion is don’t stop at 25 cents. If New York and New Jersey can legally charge an astronomical tax on cigarettes and bank all the profits for themselves, why can’t we?
Another conclusion drawn from this data is that smokers will pay whatever it takes to feed an addiction. According to www.newyorkcigs.com, the state of New York does comparable tobacco sales per capita to the state of Virginia and Kentucky, who charge a dismal 3 cents per pack.
This brings up another interesting observation. These cigarette taxes are aimed at preventing smokers from buying high-priced cigarettes, and encourage them to quit smoking and save their money. But in states where the tax is only 3 cents, smokers are not noticeably taking advantage of the bargain, and in states where the tax is $1.50, smokers aren’t quitting on account of bankruptcy.
The bottom line is that the cost of a pack of cigarettes is unimportant to an addicted smoker. If a seasoned smoker had to pay $100 for a pack or suffer withdrawal symptoms, I think most of us would know the poison of choice.
We are raising cigarette taxes in hopes of prevention, but prevention is not happening. Indifference is happening. This method is not working, yet we continue to spend this excess money on programs not going anywhere. It seems to me we are pumping money into preventing people from doing something they are eventually going to do anyway.
So, instead of spending the profits on lost causes, why don’t we invest in the future of our economy?
Imagine the possibilities.
If the state of Iowa sold 25 million packs of cigarettes per year (that is only a pack a week per smoker), at a 61-cent tax per pack, some possible outcomes might include:
* More than $15 million in profit.
* Almost enough funding to subsidize the recent tuition increase.
* Enough funds to create 600 new jobs.
* Extra aid to farmers in times of drought, flood, hardship, etc.
The potential outcomes are endless.
Next time you purchase a pack of cancer sticks or see someone you know puffing away, think about where you want your hard-earned money to go. Up in smoke, or towards a brighter Iowa future?
Ashley Pierson is a senior in finance from Forest City.