Thursday, January 15, 2009

Arkansas' Sin Tax

Ouch! A ton of bricks are hitting smokers! Not only is Gov. Beebe considering a 56 cent tax increase on cigarettes but Congress is now in the process of increasing the federal tax on cigarettes.
in the House on Wednesday, 40 Republicans joined Democrats in passing a spending increase for the children's health program. The bill would raise the federal excise tax on cigarettes by 61 cents to $1-a-pack to pay for the SCHIP expansion. The bill before the Finance Committee also calls for the tobacco tax increase.

The federal tax is to fund the SCHIP program for children 30 years and younger while the state tax is to fund a trauma system in Arkansas. There may be a little problem with both the federal and state's desire to raise revenue. They may be taxing cigarettes too high that enough people may have to quit. The revenue the politicians were counting on may dry up and the health program lose funding.
I quess the politicians are forgetting that the ideal sin tax is high enough to pay for your program, but not so high that people will actually quit the vice. It would be really inconvenient for Gov Beebe's profits from the cigarette taxes to die out because he killed the goose that laid the golden egg.

1 comment:

Hardtack said...

If I heard correctly, there is a correlation between the taxes on cigarettes and the number of people who smoke. You are so right, but I doubt if Beebe (who believes in global warming) is thinking that far in advance.