July 12, 2005

The American Cancer Society vs. the State of Minnesota

In a post yesterday we discussed the competing objectives being sought by folks who support the pending Minnesota cigarette tax hike. The legislature clearly want to use the estimated $380 million from this hike to balance their budget and pay for services-- but anti-tax advocates historically think of the cig tax as a way of discouraging smoking. In other words, some people are thinking of this tax as a fiscal policy tool, but others see it as a social policy tool.

Minnesota Public Radio has a piece today that makes very clear what the American Cancer Society thinks will happen as a result of this hike:
Matt Flory of the American Cancer Society says the new tax will either stop or prevent 40,000 Minnesotans from smoking. "We're very confident that this will prevent smoking. And if we reduce smoking we'll reduce tobacco related diseases which will reduce health care costs," he says.

He could be right about this. Alternatively, the legislature could be right when they say they can get $380 million for health care services out of this hike. But it's easy to see that these two groups have very different expectations about what will happen next year-- and one of them will likely be very disappointed at the outcome.


At 12:47 PM, Anonymous squarestater said...

It's indeed a dilemma. The forecast for the $380 is probably based on a static benchmark (it probably accounts for the long term decline in smoking but doesn't account for a big drop due to the tax). One problem that has come up is when you issue bonds secured by the revenue stream: if the stream is off, you have to make it up from somewhere else and your credibility suffers.

At 1:11 PM, Blogger American Lung Association of Minnesota said...

The American Lung Association of Minnesota supported the price increase as well, for the same reasons. People will quit, especially younger smokers.

When you see the cost estimates taxpayers bear for smoking in Minnesota, your headline could have read:

"Smoking Minority Places Heavy Burden On All Minnesota Taxpayers"

However, the real issue is health, not tax (fee) revenue.

Bob from the American Lung Association of MN

At 7:07 PM, Anonymous Blue Cross of California said...

It's unfortunate to hear the health care services could be out of the hike. I hope we can improve health care as we are in a major crisis.


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