
Last year, when I was still a Legislative Assistant in the Michigan House of Representatives, I had a front-row seat for the debate over House Bill 5632, the legislation that raised cigarette taxes by 75 cents and placed Michigan at #2 on the list for highest cigarette taxes in the country.
If my memory serves me correctly, the debate was utterly predictable. Those in support of the tax argued in two primary (and seemingly contradictory) directions: first, that the state desperately needed the increased revenues that would result from jacking up the tax in order to continue serving the low-income community’s health care needs through the state’s Medicaid program; and second that increasing the tax would be beneficial to public health because many smokers would be forced to give up the habit due to the drastically increased cost. This mindset is summed up nicely in this excerpt from Nurseline, a publication of the Michigan Nurses Association, which supported the tax increase:
It is estimated that with a 75 cent increase in the tobacco tax, there will be roughly a 13 percent decrease in youth consumption and a 7 percent decrease in adult consumption of tobacco. These declines in consumption will end up saving Michigan about $1,590 billion in long-term healthcare costs. Additionally, the revenues generated would protect health care for 200,000 Michigan children, improve the state’s health status by reducing smoking, protect thousands of Michigan health care jobs by earmarking the revenues to health care, and bring real dollars to Michigan from federal Medicaid matching monies.
Conservatives argued that a reasonable person might conclude that the second benefit (a reduction in smoking rates) would eventually cancel out the first (increased cigarette tax revenue) – although it would be just as reasonable to assume that a great many smokers wouldn’t quit smoking but would instead find ways – often illegal – to circumvent the new tax.
They also pointed out that the increased tax would disproportionately impact the poor, and would in the end be counterproductive in that it would greatly harm small businesses (such as gas stations and convenience stores), causing job losses and further hampering Michigan’s already struggling economy.
Needless to say, the tax was raised.
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