Thursday, 27 March 2008
Chew on this contradiction Print E-mail
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State lawmakers and the governor are touting a new tax on chewing tobacco, but we have to wonder what effect the measure will really have, and even why it was brought up.

The Legislature passed and the governor signed House Bill 356. It changed how "moist snuff" is taxed, from a 35-percent tax on the wholesale price to 75 cents per ounce.

 

In other words, the most-expensive brands formerly bore the heaviest taxes. But imposing one flat rate will bring down the taxes on the pricier brands, and raise them on the cheaper ones.

The fly in the ointment is that the most-expensive brands, such as Skoal and Copenhagen, dominate the market already. If you're going to put a pinch between your cheek and gum and enjoy spitting brown slime for an hour, the price might not be the kind of thing you worry about.

Bill proponents, such as co-sponsor Rep. Becky Lockhart, R-Provo, say a benefit of the bill might be that raising the price of low-cost snuff might discourage young buyers.

The trouble is that the expensive brands also are most preferred by kids as young as 12, according to Centers for Disease Control and Prevention, so the kids will get a break. Anyone who has ever shoe-shopped with a teenager knows they care little about price, anyway; they want what is popular. That same impulse lures them to the best-known smokeless tobacco brands. The new Utah law will, if anything, make those brands more affordable.

Backers of the measure say the law's main aim was to make the tax fairer. "It levels the playing field so tax policy doesn't determine winners and losers," said Sen. Curt Bramble, R-Provo, who co-sponsored the bill.

"More than anything, it normalizes the tax policy," said Lisa Roskelley, spokeswoman for Gov. Jon Huntsman, who signed the bill. That may be, but it only begs the question of what other social ills the state might foster in the name of tax policy.

If our leaders want to resolve tax inequities, there are many other unfair levies that ought to be adjusted ahead of smokeless tobacco. There's the property tax, which is the only tax you'll ever pay that isn't based on a market transaction. It's like basing income tax on a government estimate of what you should have been paid.

Or consider the sales tax. Some critics say it's unfair because it charges a working-class couple the same percentage on winter jackets for the kids as it charges a millionaire for buying an Escalade.

The income tax also tries to sort out winners and losers, by taxing the winners more -- in effect punishing those who society deems most productive. And, of course, those who can afford the best lawyers and accountants get the most out of loopholes.

In the last session, the Legislature did little about those inequities. But somehow, smokeless tobacco slipped through. Go figure.

The tobacco bill might even result in less money for state coffers, though it is meant to be revenue-neutral. Anti-smoking forces say that when the state gets a percentage of the wholesale price, its take automatically increases as the price goes up. But when the price is a flat rate per ounce, the state's share is locked in, no matter how high the price goes. It literally takes an act of the Legislature to bring the tax in line with inflation.

Finally, we are not talking about a product that is a necessity, or even neutral; it's a potentially dangerous substance, containing 28 cancer-causing agents. The whole business gets even stranger when you consider that the Legislature was so horrified that teenagers might be exposed to sweet-tasting malt beverages in supermarkets that it banished the so-called "alco-pops" to the state liquor stores. Yet now, the lawmakers have in effect legislated a price cut in the smokeless tobacco products most tempting to young people.

All of this raises the question of how such a bill could pass in the Legislature.

Media reports charge that the U.S. Smokeless Tobacco Company has been waging a battle in many states to do exactly what happened here: Change a tax based on price to one based on weight or other fixed measure. And, in a wild coincidence, the company is the maker of Skoal and Copenhagen brands.

Printed reports claim that a lobbyist for the higher-priced snuff products helped push this measure through in Utah. We can't judge whether that's true or not. But the more this bill is studied, the odder its success appears.

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