The Arizona Desert Lamp

Quitting smokers continue to punish children

Posted in Politics by Evan Lisull on 27 May 2009

SmokingIn the aggregate, this should be great news:

PHOENIX — The number of adult Arizonans who smoke dropped by nearly 20 percent since 2007, according to a new report being released today.That decline is the sharpest in the nation, said Bill Pfeifer, president of the American Lung Association of Arizona, which released the survey.

The study, based on monthly telephone surveys, shows the percentage of Arizonans 18 and older who smoke dropped to about 16 percent.

In human terms, it translates into 170,000 people who no longer are smoking.

Yet a large decrease in smokers will lead to a large decrease in tobacco tax revenues. And thanks to 2006’s Proposition 203, this will lead to a large decrease in revenues for the state’s children’s health and education programs. Last February, the program began to see hints of the financial struggles ahead:

First Things First ended fiscal 2008 with $236.6 million: $82.7 million in its administrative account and $153.9 million for programs to benefit Arizona’s children. The organization plans to spend $91 million in its first full year on strategies set up by the regional councils, plus additional money on statewide initiatives.

The state legislature did take $7 million in interest earned on First Things First’s coffers to close this year’s budget deficit. That loss won’t affect the initiative’s plans in the next few years but could hurt the organization’s long-term progress, especially if the Legislature decides to take more interest earnings to balance future budgets.

. . .

Money the initiative makes off the tobacco tax is expected to decrease over time, as Arizona’s population growth levels off and more people never start or quit smoking. Because that decrease is anticipated, there is a need to save funds now. Hibbs said he was disappointed by the legislative decision to appropriate money from the fund’s interest, even though that’s not likely to have a short-term effect.

As far as the $7 million taken by the state goes, the money taken to balance the budget could’ve have remained in the program, had the state legislature not mitigated its proposed cuts to the universities. Snark aside, this money pales in comparison to the revenue lost from quitting smokers. The Campaign for Tobacco-Free Kids (akin to MADD in its duplicitous name) estimates [DOC] that Arizona averages 217.5 taxed packs of cigarettes sold per each smoking adult in the state. A First Things First tax of 80 cents per pack leads to an average of $174 per smoking adult for the program. With the estimated 170,000 person drop, this would result in a revenue shortfall of $29.58 million – a 12.5 percent drop from their total revenues. This is also a conservative estimate, as it doesn’t take into account the study’s finding that those who were smoking, smoked less.

Also worth considering is the high administrative cost associated with the program – 34.95 percent of total FTF tax revenue is spent on administrative costs. By way of comparison, the Gates Foundation spends [PDF] 7.96 percent on administrative overhead, and the Salvation Army spends [PDF] 9 percent, including fund-raising.

It is one thing to support a purely Pigovian tax, that charges smokers in direct proportion to the “costs” that they incur on society. (Of course, as has been pointed out elsewhere, such costs would be absorbed by smokers anyways if the state wasn’t providing the care in the first. A different debate for another day.) It is quite another to support a punitive tax on a minority group, as supporters of Proposition 203 readily admitted:

Rarely do we see an admission that the movement to increase cigarette taxes is politically motivated. In an article (subscription required) in today’s State Tax Today, however, a proponent of Arizona’s Proposition 203 (which would increase that state’s cigarette tax to fund, among other things, early childhood education programs) admits that politics drove their decision to use the cigarette tax as a funding vehicle:

“We polled on everything…(t)his was the thing that would be the most succesful [sic] in Arizona.”

Not quite as popular as confiscation of minority-owned goods in Weimar Germany, but you get the idea. What’s more, the programs supported by the tobacco taxes are almost exclusively aimed toward poor children – whose parents are disproportionately affected by the regressive tax. Rob with one hand, dole with the other.

Children’s health and smoking cessation are certainly legitimate (if not incontrovertible) aims of government. But by conflating the two together, both aims are ultimately hindered.

Image courtesy of Flickr user Justin Shearer

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