February 15, 2007

Indiana Cigarette Tax Hike Advances

The Indiana House Public Health Committee sent a Valentine to Indiana smokers yesterday, unanimously approving a bill that would almost double the state's cigarette tax from 55.5 cents per pack to $1.10 per pack.

Lawmakers are giving two very different answers about what this proposal is supposed to accomplish. On the one hand, it's apparently going to be the sole funding source for a plan to provide health coverage for low-income Hoosiers. On the other hand, it's supposed to act as a stick to make Indianans stop smoking. Here's what Governor Mitch Daniels said in defense of the proposed cigarette tax hike last week:
"No one's out to injure anybody's business," Daniels said last week. "But reducing the second- highest rate of smoking in America is an important public- health issue in this state. Keeping young people from smoking is a very important objective. "
These are obviously conflicting objectives. If you want the cigarette tax to pay for health care, well, the yield of the tax had better grow each year at least as fast as the cost of paying for health care. But if you want the cigarette tax to act as a deterrent, preventing people from smoking, then really what you're shooting for is a decline in the amount of tax that actually gets collected.

Taken on their own, these are each pretty good goals: health care is good, and smoking is harmful. Encouraging one, and preventing the other, are both good objectives. But if Indiana lawmakers ultimately give the thumbs up to this proposal, one of these objectives simply will not be met.


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