Tobacco tax makes sense to those who don't have to pay it

The Arizona Republic
Wednesday, October 25, 2006
Laurie Roberts

Of all the oddball ideas on next month's ballot - and there are a bunch - none is more bizarre than Proposition 203. Or sadly, more of a sure thing.

Proposition 203 is like pitting Pee-wee Herman against the Terminator, like calling up a tee-baller to pitch to Barry Bonds. Like inviting a leper to run against the Gerber baby.

Of course, voters will choose the little tot. Proposition 203, the Arizona Early Childhood Development and Health Initiative, will coast to an easy victory next month. Never mind that it's a bad idea - and not just from the perspective of smokers.

Proposition 203 would raise the tax on cigarettes by 80 cents a pack. That is, a 68 percent increase in the tax on cigarettes. That is, a 68 percent increase in the tax on cigarettes on top of the 556 percent increase in the tax on cigarettes over the past 12 years.

This, to fund preschool and health screening programs for children.

You might wonder about the logic of taxing tobacco to fund preschool. Unless tots these days are bumming cigarettes on the playground, the two don't appear to be connected. But then, Proposition 203's authors didn't target tobacco because it's related.

"We knew, in our analysis, that we could raise enough money from this source to fund the necessary programs for at least 20 years," explained Nadine Mathis Basha, chairman of the campaign. "We also knew Arizonans have approved using this tax twice before to fund other important issues like corrections and health care."

In other words, voters will approve it because they don't have to pay for it.

According to legislative budget analysts, Proposition 203 would bring in a sweet $188 million a year for preschool. But it may drain $23 million a year from existing programs that are funded by tobacco taxes, as sales decline due to the price hike. Among those most affected, Proposition 203 is expected to rob $3 million a year from the state's General Fund and $8.7 million from health care programs for the poor. It'll strip nearly $2.2 million from trauma centers and $1 million from medical research. At present, tobacco taxes fund dozens of research projects ranging from spinal-cord injury to studies of Alzheimer's and Parkinson's disease.

Given the enormity of the tax increase, Kevin McCarthy, president of the Arizona Tax Research Association, expects the losses to existing programs will be twice the $23 million that legislative analysts predict. "It's going to do huge damage to a lot of existing programs," he said.

Proposition 203 supporters disagree. They say that population growth will offset any reductions in individual use.

Apparently they haven't heard that while Arizona's population has exploded over the past decade, tobacco sales have dropped nearly 23 percent as the average price of a pack has risen to $4.30. Add in a 68 percent tax increase and it seems only logical that more smokers will either kick the habit or buy their cigarettes on reservations or over the Internet to avoid the tax.

Just don't try to convince Proposition 203 supporters of such a thing. They believe there's plenty of money to go around and are spending $2.8 million to get a sizable piece of it. Imposing another tax on smokers, they say, is "fair and appropriate."

"Most importantly, we choose it because this issue is so important and we need to have a program like this that has been proven," said Steve Roman, a campaign spokesman. "We believe when people take a look at this issue and how we are going about solving it, the voters will vote yes." Sure they will. They aren't the ones who, one way or another, will have to pay for it.