The taxmen cometh
Don’t ask me what I want it for
If you don’t want to pay some more
‘Cause I’m the taxman
Yeah, I’m the taxman
— George Harrison
THE House of Representatives has passed a bill to make tobacco products more expensive. This is a “popular” measure, and is likely to become law soon. CHCC says a tobacco tax hike can reduce tobacco use while Customs says it will provide more funding for the agency. However, fewer tobacco users will mean reduced tax collections so how can there be additional funding for anyone?
Does it matter? The do-gooders in government pass laws because they’re well-intentioned not because these laws “work.” So we have government assuring us that an anti-littering law will prevent littering; that more punitive laws against illegal drugs will reduce their use; and that creating CHCC will result in a “professionally managed, nationally accredited, independent public healthcare institution that is as financially self-sufficient and independent of the Commonwealth Government as is possible.” (Notice that the 2009 law mentioned “independent” twice in one sentence, and threw in “self-sufficient” as well — in case some of us don’t know what “independent” means. Incidentally, independent CHCC is asking $150 million from the CNMI government.)
The tobacco-tax-hike measure, in any case, states that the “tobacco tax revenues [will be invested] into health promotion and disease prevention and control programs for better health outcomes of CNMI residents.”
There you go.
What’s that? What, you ask, is the government’s track record in complying with its mandatory funding allotments and earmarks? Long story short: MVA, PSS, Retirement Fund.
In a “white paper” it submitted to the House Committee on Health and Welfare earlier this year, CHCC noted that the law — 3 CMC §2177 — states that “30% of the increase in the cigarette tax authorized” under another law, 4 CMC §1402(a)(16), “shall be credited to the tobacco control fund.” According to CHCC, from FY 2017 to FY 2019, $9.5 million was credited to the tobacco control fund of which roughly 20% was transferred to the healthcare corporation. “This means that only roughly 6% of the cigarette tax increase was appropriated for health programs. FY 2017 and FY 2018 are the only years in the CHCC’s history when any of the tobacco control funds were received by the CHCC.” In FYs 2017 and 2018, the local economy was still growing.
So soon, we’ll have another “earmarking” law because laws do exactly what they set out to do — except when they don’t which is the usual state of things.
But again, who cares? Tired, old or useless “remedies” can always be dressed up as new because not a lot of us remember events in the past that can’t be Googled easily.
History will teach us nothing
IN 1998, John Attarian, an adjunct scholar with the Midland, Michigan-based Mackinac Center for Public Policy, reported that Michigan created a smuggling problem by raising its cigarette tax from 25 cents to 75 cents a pack. “The tax doesn’t even raise the money it was expected to raise,” he said. “But the tax hike did create an incentive to smuggle cigarettes.” He said the “tax makes the profit from smuggling cigarettes into Michigan enormous…and gives store owners a financial incentive to buy contraband cigarettes. There is, then, a strong temptation for both individuals and businesses to become criminals.”
In 2018, economist Daniel J. Mitchell wrote that “there is plenty of evidence — both in America and elsewhere — that higher cigarette taxes backfire.” In D.C., New York and other cities, moreover, black market “loosies” remain available.
According to the Washington Post: “Shoukat Choudhry, the owner of the BP and four other gas stations in the city, says he does not see whom the higher taxes are helping. His customers can drive less than a mile to buy cheaper cigarettes in Maryland. He says the men in his parking lot are selling to teenagers. And the city is not getting as much tax revenue from his shops. Cigarette revenue at the BP store alone fell from $63,000 in September to $45,000 in October, when the tax increase took effect on the first of the month….”
But then again, NMI smokers can’t just drive to Maryland. And that’s also why the “zero-tolerance” laws against illegal drugs are so effective in preventing the entry of…never mind.
