When new laws are passed, another law – the law of unintended consequences – is always a factor that must be considered.
Legislative histories at the state and federal levels are full of instances in which well-intended legislation passed to correct a problem or address an issue resulted in a worsening of the problem or even created an entirely new problem.
Some might say that a recent spate of tax increases on cigarettes in many states, including Mississippi, as well as a federal tobacco tax hike fit that category. Smoking nationally is down, owing in part to the tax increases, and so is the income stream from the states’ 1998 settlement with tobacco companies, which originated in Mississippi. States this year have seen a 16 percent drop in disbursements from the settlement, which are based on a formula that factors in how many people are smoking. That figure is down to an all-time low figure of 20.6 percent of the U.S. adult population.
But viewing a downward trend in tobacco use and tobacco-related revenue as a negative, unintended consequence of higher tobacco taxes would be a mistake. If the decline in smoking and use of other tobacco products continues, that will be precisely what most supporters of the higher taxes intended.
It’s not entirely accurate to say that generation of new revenue from the politically easiest source to tap wasn’t partly responsible for the passage in 2009 of a bill raising Mississippi’s cigarette tax from 18 cents to 68 cents a pack, which came on the heels of a 62-cents-per-pack federal tax increase. There’s no doubt that opposition to the state tax increase from many legislators, as well as Gov. Haley Barbour, a former tobacco lobbyist, softened in the face of declining state revenues and the specter of looming deficits.
But new revenue wasn’t the primary reason for long-time advocates of the increase. In fact, discouraging smoking was at the top of the list for raising the tax to a level more consistent with surrounding states. Even with the increase, Mississippi’s tax is still barely half the national average of $1.34 per pack, which took a jump last year when eight states in addition to Mississippi increased theirs.
If decreased tobacco use results in a downward trend in tobacco revenues in coming years because fewer people can afford to feed their nicotine habit, not only will lives be saved, health costs associated with tobacco-related illnesses will decline. That ultimately should mean less upward pressure on the state health care budget – a consequence both positive and intended.
NEMS Daily Journal