Tax chairman Lake blasted by leader of national tax reform group over cigarette plan
House Revenue and Taxation Committee Chairman Dennis Lake, R-Blackfoot, is taking heat over his plans to allow a proposal to increase Idaho’s cigarette tax by as much as $1.50.
Grover Norquist, president of Americans for Tax Reform, a Washington, D.C.-based flat-tax advocacy group, said that the Idaho state government, which could face a budget gap between $200 million and $400 million in fiscal year 2012, needs to live within its means and forgo any planned tax increases.
“The Idaho legislature should not be looking at any tax increases as a way to plug their budget. Just as the hardworking people of Idaho have to live within their means, the state needs to learn to do the same while rejecting any kind of tax increase,” wrote Norquist. “This 2010 election cycle spoke loud and clear against tax hikes and excessive spending. Taking tax increases off the table and looking to spending cuts is the answer to Idaho’s budget problem.”
Norquist also blasted Lake for the Blackfoot Republican’s notion that the cigarette tax increase proposal is about promoting good health, not raising revenue.
“It is naïve to think that a tax increase is not about raising revenue, especially when Idaho is facing an unbalanced budget problem to the tune of up to $400 million. Of course this tax increase is about raising revenue,” said Norquist. “When cigarette taxes are raised to prop up government spending levels, they don’t work. Cigarette tax revenue declines over time, making the tax hike a placeholder tax to be replaced with taxes on other behavior and/or products at a later date.”
When asked about the Norquist’s comments, Lake seemed unbothered. “That’s OK,” he said. “They have their opinion and we have ours. This isn’t being done to raise revenue, it’s being done to protect public health and, in particular, the health of young people.”
For evidence that the bill isn’t a revenue-centered project, he points to the idea’s backers, a consortium of pro-health groups. “What do they care about revenues?” asked Lake. “They are more interested in helping people.”
Norquist’s argument isn’t completely solid, at least with respect to the message voters sent to Idaho’s state senators and representatives regarding cigarette tax increases. While it is true that every lawmaker who voted for massive cuts to state departments and public schools in the 2010 session won re-election Nov. 2, polling data released by Moore Information, an independent Portland-based polling firm, in mid-October suggests that Idahoans might favor boosting cigarette taxes to raise revenue for state programs.
The poll, conducted Oct. 16 and 17 found that 73 percent of 500 Gem State residents queried support a $1.50 hike in the cigarette tax to preserve funding for Medicaid, and youth smoking prevention and smoking-cessation programs.
Idaho’s tax on cigarettes is the eighth-lowest in the nation at 57 cents per pack and the lowest in the Inland Northwest. The nationwide average sits at $1.45 per pack in state taxes. According to 2008 numbers released in the Wall Street Journal, about 17 percent of Idaho adults smoke.
Studies suggest that if Idaho’s tax rate is increased by $1.00, as many as 6,200 Idahoans would quit smoking. The Campaign for Tobacco-Free Kids (TBF), a group dedicated to developing policy options that prevent youngsters from taking up smoking, also says that the state would likely save upward of $230 million in health care costs due to lower smoking rates.
Some estimates forecast that Idaho would bring in an additional $46 million in tax revenue if the tax is hiked by $1.00, while other predicts say a $1.50 increase would hike tax revenues by $52 million. Those numbers account for the anticipated decline in smoking rates. Lake said he doesn’t believe the $1.50 plan will fly with his committee members, but instead believes lawmakers might agree on a lower figure.