I don’t necessarily see anything wrong about raising the state’s cigarette tax by $1.50 a pack, but the legislative effort to pass it again shows how Oklahoma is still dependent on small fixes to help shore up its budget.
— Tobacconomics (@Tobacconomics) March 6, 2017
The proposed tax increase would generate around $184 million the first year in a budget of approximately $7 billion, and some $50 million of that would go to the Department of Mental Health and Substance Abuse Services, which is a good thing. With additional matching federal funding for health programs the amount of money the tax would generate has the potential to increase incrementally.
The problem though is that part of the mission of the tax is to get people to stop smoking so, if that happened, fewer smokers would mean declining revenue. It’s a tax that seeks its own demise.
In addition, those of us that don’t smoke won’t contribute at all, and smokers would pay a steeper price for their habit. The tax is regressive in that lower-income people, if they smoke, spend more of a percentage proportion of their money for cigarettes. I understand why smokers would oppose the cigarette tax and feel singled out, but the evidence is clear that long-term smoking can and does lead to severe illnesses, such as cancer and emphysema. The nicotine contained in cigarettes is also a highly addictive drug, and it’s difficult to quit. The tax is regressive, but it’s also a public health issue in terms of the overall medical costs to our society.
So it’s a debatable issue with no real answer. Do people have the right to smoke? Of course. But how much of that right infringes on other people in terms of its health costs to our society? This question will never be resolved to everyone’s satisfaction, and we know people will continue to smoke in the foreseeable future.
The state faces a $878 million shortfall for next fiscal year. Education funding is at dismal levels, and teacher pay here is ranked 49th in the nation, pushing some educators to leave the state for increased salaries. The budgets of state agencies have been sliced because of the state’s recent budget problems caused by an oil slump and relatively recent enacted income tax cuts and tax credits for the energy industry.
As I wrote earlier, the state budget faces structural financial change. What if we’ve experienced the last true fossil fuel boom in Oklahoma? Revenues from production taxes—taxes that have been cut recently—and income taxes paid by oilfield workers have always driven the economy and the state budget to an proportional extent in Oklahoma. What do we do now besides finding small revenue streams like the cigarette tax to help balance the budget? What happens when there are no more streams to find.