The recent debate between congress and the president over expansion of SCHIP has mostly been in regards to the total spending increase. The president wants a $5 billion increase, while congress wants to increase the SCHIP budget by $35 billion in order to further expand the federal health insurance program. And it doesn’t appear that either side is willing to compromise.
But congress has outlined how they would generate the extra $35 billion they need to pay for their proposal. A cigarette tax hike. Currently the federal tax on cigarettes is 39 cents a pack, and congress would raise it to $1 per pack. This is generally a pretty popular plan, with both political parties agreeing that a cigarette tax is a good place to generate revenue. But critics point out that this is a regressive tax, leveled more heavily on poor, uneducated Americans.
According to the American Heart Association, 35% of people with 11 or fewer years of education are smokers, compared with only 12% all of people with at least 16 years of education. Smokers have relatively few defenders these days, so a cigarette tax is likely to be a popular funding tool. If the eventual outcome of a higher federal tobacco tax was a reduction in the number of smokers, that would be great – but we have to remember that the primary purpose of this legislation would be to generate revenue, with the well being of the smokers tacked on as a possible side-effect.
Like most non-smokers, I have very few problems with the idea of a higher tobacco tax. Afterall, it won’t dent my budget at all. But a regressive tax is probably not the best long-term solution. And what if it does result in fewer people smoking? Then where will the government make up the revenue shortfall?
Instead of tobacco, what if we were to increase the tax on alcohol? This seems like a more fair option. Alcohol, like cigarettes, is a luxury item – not a necessity, but something that many people enjoy. And in large quantities, it is detrimental to health, so it makes sense to have an alcohol tax funding a health care bill. Most importantly, alcohol is used by all classes of society. And while a poor person might drink $5 six-packs of beer, a wealthy businessperson would think nothing of a $2000 bartab to entertain friends. So the conundrum of placing the financial burden on the backs of the poor and uneducated would disappear.
80% of Americans drink alcohol, compared with only 25% who smoke cigarettes (here in Colorado, only 17.9% of adults smoke). So a tax on alcohol would be much more evenly distributed across the population.