When it comes to funding a government, it does not get any more stupid than this. All 50 states and the District of Columbia impose excise taxes on the purchase of cigarettes, but only one—the great state of Missouri—has the following distinction.
Missouri ranks dead last in the nation, with a tax of just 17 cents per pack, one-ninth the national average. It is so far behind that if it raised its levy by more than 70 percent, it would still rank 51st.
This is literally breathtaking.
Behold the raw numbers: The national average for taxation of cigarettes is $1.53 per pack; the second-to-last state, tobacco-growing Virginia, collects 30 cents per pack. Cash-strapped Missouri could potentially generate as much as $67 million in new revenue annually with a 12-cent hike, while continuing to “boast” that it has America’s lowest cigarette tax.
This is not breaking news. As recently as November 2012, when the state was debating whether to pass Proposition B—a measure that would have raised the tax by 73 cents per pack—proponents noted that Missouri’s cigarette tax was just one-eighth the national average. That measure failed narrowly. Now, Missouri’s tax is one-ninth the national average.
The real news today is that there is no news out of Jefferson City. There is much grappling about how to raise or cut state revenue, but cigarette taxes are off the radar. After years of dodging the subject of inadequate revenue levels, Gov. Jay Nixon finally addressed it in his State of the State speech—but made no mention of tobacco or other sin taxes.
To his credit, Democratic state Rep. Rory Ellinger of University City filed House Bill 1315, which would increase the cigarette tax by 4 cents per year for the next four years, but only after a vote of the people. The notion of a gradual increase is a good one, although I would argue that the numbers are far too low. It’s too soon for another ballot item, but if there is one, it should call for something like 10- to 12-cent increases per year over the course of a decade.
But that’s not what is needed now. There’s no reason why the General Assembly cannot and should not enact a modest increase in cigarette taxes on its own. There’s no statutory need to go to the electorate for a small hike, as it would fall well below the Hancock Amendment thresholds requiring a popular vote. And as I’ll explain in more detail momentarily, there’s much precedent for legislative action to modify a previous vote of the people.
The conventional wisdom is that the issue is a political nonstarter because the 2012 vote was the third time in a decade that voters have rejected a cigarette-tax increase. (The other attempts came in 2002 and 2006.) But each of those outcomes was narrow, and more important, all three propositions would have enacted dramatic cigarette-tax increases, ranging from 55 cents to 80 cents per pack and aimed at compelling large numbers of people to quit smoking.
The voters haven’t rejected the idea of a modest increase in the tax because they’ve never been presented with one. There’s no reason to assume that people who opposed an 80-cent increase would also have opposed, say, one of just 12 cents. Considering that opposition to a large increase has never been greater than 51.4 percent, with an average margin of victory of just 2 percentage points, it’s ridiculous to infer that a much smaller increase wouldn’t fly.
So here’s a modest proposal to the state legislature: Enact a 12-cent increase now on the price of a pack of cigarettes, and raise up to $67 million in new annual tax revenue while bridging the unconscionable gap between Missouri and the next-to-last state in the nation. This has to be the lowest-hanging fruit in the history of taxation.
Hopefully, the revenue number might prove a little high, as the increase (roughly 3 percent of the total price of a pack of cigarettes) might cause people to reduce their purchases—and thus, their smoking—by a small amount. That’s the intended effect of a sin tax.
It is doubtful that large numbers of people would quit smoking over a 12-cent-per-pack increase. I respect that the primary purpose of the three failed referenda in the state was to do just that: Get people to quit a habit that takes an awful human toll, with extraordinary healthcare costs to the state.
That’s why people like me supported all three propositions to enact substantial raises in the cigarette tax. And when I say people like me, I mean residents of the state’s metropolitan areas, as well as midsize cities.
As I pointed out in this space just over a year ago, voting on cigarette-tax initiatives has exposed a chasm between cities and rural areas, rather than along party lines. In 2012, for example, 61 percent of St. Louis city voters and 59 percent of St. Louis County voters supported Proposition B. (That was just below the 62 percent who supported it in Kansas City.) The measure also passed in Republican-dominated St. Charles County and southwest Missouri’s Greene County. But the proposition was rejected in 105 of the state’s 115 counties; among 53 counties with 18,000 or fewer residents, it was defeated by an astonishing margin of more than 30 percentage points.
This result was not an outlier. The split between urban and rural interests was similar on two other referenda, ironically named Proposition B as well. One, in 1999, proposed establishing a concealed-carry permit for firearms; the other, in 2010, established a range of new regulations on the state’s puppy mills. In both cases, the urban side won, with margins slightly larger than 3 percent—more than the rural side had on any of the three tobacco referenda. The concealed-carry proposition was rejected on the strength of urban votes, and the puppy-mill measure was carried.
But guess what happened? Five years after the gun measure failed, the rural-dominated state legislature arrogantly nullified the will of the people by enacting on its own a measure similar to the one that voters had rejected. And our puppy-mill “triumph” was reversed before the ink was dry, with a sweeping repeal of key parts of the ballot measure in the 2011 legislative session.
Where is the outrage in St. Louis, Kansas City, Columbia, and other midsize cities? Why do we end up losing on ballot items even when we win? And why is it that legislators from the urban and suburban areas—both Republican and Democrat—don’t have political will and courage to stand up for our side the way that rural representatives do for their constituents?
I’m not proposing that urban interests try to force something like a 73-cent cigarette tax down the smoke-filled throats of those who successfully fended off large increases three times in a row. But there’s nothing about any of those cigarette-tax ballot items that would begin to preclude a modest increase in the tax.
No doubt, rural opposition to the cigarette-tax initiatives was partly rooted in a general antitax, antigovernment disposition. But I think there was also the sense that a large, overnight increase in the tax—for the stated purpose of making people give up smoking—represented a confiscatory approach by government. If they can take my smokes, my guns are next!
There’s no reason to assume that a modest tax increase would engender as strong of an emotional reaction as a statewide vote to wipe out smoking. When powerful lobbyists for convenience stores make their case against increasing the tax, let them explain how Missouri would be uncompetitive on tobacco sales while still ranking 51st in the nation in cigarette taxes. Let them explain why more tobacco sales are a good thing for the state.
Maybe the pro-cigarette forces would like to decry the medical community’s claims that smoking is bad for your health. Many of these people also reject the theory of evolution, after all, and still more regard climate change as a conspiracy foisted upon us by liberal scientists. It would at least be entertaining to hear this point of view.
And if that’s indeed what our state stands for, then let’s mandate that the Missouri Department of Economic Development boast about our singularly cheap cigarette prices when encouraging companies to expand or relocate here—see what CEOs think of that. And for that matter, the Missouri Division of Tourism should be directed to promote the state as a place to save more on cigarettes.
That might sound bizarre, but it wouldn’t be any more irrational than the state’s policy toward smoking in general. Did you know that Missouri ranks 50th in smoking-cessation spending, according to the Campaign for Tobacco-Free Kids, ahead of only New Jersey? Are you shocked to learn that Missouri “enjoys” a top-10 ranking among the states in incidence of smoking?
Nominally raising the cigarette tax to bring Missouri within a cent of the next-lowest-taxing state would not change the world. It would not get enough people to quit smoking to save taxpayers an adequate amount on healthcare costs. It would not reduce mortality.
But it would at least cut into the state’s governmental stupidity rate. And that would be progress.
SLM co-owner Ray Hartmann is a panelist on KETC Channel 9’s Donnybrook, which airs Thursdays at 7 p.m.
Commentary by Ray Hartmann
