Wall Street Journal (and others) make silly insinuation that tobacco tax increase is an attack on the poor

Friday, April 03, 2009

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Ouch, this article here is painfully dumb. Ready for some twisted logic? Here we go:

Early in February, the president signed a law to triple the federal excise tax on cigarettes -- which will jump from 39 cents per pack to $1.01 today. His administration projects this tax hike will bring in at least $38 billion over the next five years.
Okay, just numbers so far. Here comes the silly insinuation:
The fairness issue is particularly troubling. According to the Centers for Disease Control and Prevention, only one in five Americans smokes, so the excise targets a minority -- and over half of all smokers are low income, and one of four are officially classified as poor.
Right...which is why more people are now trying to quit thanks to the tax. Here's another silly insinuation: that poor people for some reason aren't capable of making the decision to quit smoking. Poor people are just as capable of making these decisions as anyone else.

Higher taxes discourage cigarette sales. Nobel economist Gary Becker pegs the long-run price elasticity of demand for cigarettes at 0.8 -- i.e., a 10% increase in price causes an 8% decline in unit sales. The Obama tax hike translates into a 13.3% increase in the average pack price. That implies a 10.6% decline in unit sales -- which the National Tax Foundation has calculated adds up to a $1 billion overall revenue loss for hard-pressed states.
First of all, discouraging cigarette sales is a good thing. Second: this fails to take into account savings that come from better health. Take this article for example from last year:
Callers to the state’s toll-free number, (866) 697-8487, can choose to speak to a counselor, have materials mailed to them or listen to recorded “tips to quit.” Those waiting on hold get a litany of tobacco facts more frightening than any Muzak.

“If you’re thinking about stopping smoking and need a few more reasons to stop, consider this,” a woman says, with a hint of drama. “Tobacco kills more Americans than alcohol, cocaine, crack, heroin, homicide, suicide, car accidents, fire and AIDS combined.”
Finally, some more numbers here:
Increasing tobacco taxes is proven strategy to help smokers quit and discourage others from ever starting, according to the Campaign for Tobacco-Free Kids. Studies show each 10 percent increase in the price of cigarettes reduces youth smoking by 7 percent; it also reduces overall cigarette consumption by 4 percent.

For a look at what a developed country looks like where cigarettes are cheap, take Korea. Cigarettes are under $3 a pack here.
It is tough to be a non-smoker in South Korea.

On the streets, it is common to see scores of smartly dressed men with a suitcase in one hand and a cigarette in the other. I often have to dart for cover or hold my breath to avoid the odious second-hand smoke.

'From afar, they looked like smouldering chimneys billowing with smoke,' a visiting friend once told me.

In South Korea, one in two adult males smoke (about eight million), the highest rate among OECD countries.The Organisation for Economic Cooperation and Development (OECD) consists of the world's 30 most developed countries.

The percentage of smokers among males is 19 per cent in the United States, 17 per cent in Canada and 26 per cent in England.
Smoking among middle-aged men in Korea is becoming a costly problem, a recent study claims.

Researchers at the Korea Institute for Health and Social Affairs found that the economic burden of diseases due to smoking is about 52.8 percent in males and 9.5 percent in females while smoking-related diseases accounted for 18.8 percent) of all diseases in males and 2.3 percent among females, ages 40-69 in Korea.

The estimated economic cost of diseases due to smoking in Korea in 2001 was a total of $3.92 billion; $3.72 billion for males and $.20 billion for females. Researchers estimated at 40~69 age group, the socioeconomic cost of diseases due to smoking and to compare with that of all and smoking-related diseases in Korea.


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