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The Sin of 'Sin Taxes'
[March 24, 2003]

By S. M. Oliva

Like most states, Georgia is facing a severe budget crisis. Estimates place Georgia's deficit for the next fiscal year at between $800 million and $1 billion. To help remedy the situation, Governor Sonny Perdue is trying the oldest political trick in the book-he found a scapegoat.

The governor is championing an increase in the state's cigarette tax. And this isn't a modest increase either: Perdue wants the tax to jump from 12 cents a pack to 58 cents a pack, a nearly five-fold increase. The governor says this will raise $348 million. That won't be enough to erase the deficit, but it will help the state legislature avoid making some budget cuts. Every agency in the state is feeling the budget ax, including the almighty God of education spending. Needless to say, Perdue is quite eager to get his tax increase in place in order to restore even some of the cut funding.

But there's more to this. Perdue not only views a tobacco tax increase as a quick fix for his budget problems, but also as a means of paying tribute to a deceased relative, at least according to the Atlanta Journal-Constitution:

Gov. Sonny Perdue fought back tears Saturday as he pushed his plan to raise tobacco taxes to balance the budget.

Speaking at Newnan High School, Perdue told the audience about a "favorite uncle," Bo, a smoker who died of lung disease. The governor had to pause to regain his composure after saying his son planned to name his child after Bo.

The moment was an uncharacteristically emotional one for Perdue, who at town hall meetings in Newnan and in Dalton on Saturday issued a strong call for legislators to get behind his tobacco tax hike plan.

"The time for diplomacy is over," Perdue said, borrowing a line from President Bush. "I want to know if folks are going to go with me or stay in the foxhole with the French."

This is not argumentation, but smearing. To equate tobacco tax opponents with those who would coddle Saddam Hussein is beneath contempt, especially coming from a nominally Republican governor of a U.S. state. The governor's outburst, however, does expose the fraudulent premise underlying his campaign. This proposed tax increase is less about raising revenue than it is punishing individuals the state-or the governor-finds offensive. Or at the very least, it's about punishing behavior that's unpopular. After all, there's a reason politicians never propose a special tax on water or cookies.

Keep in mind, the cuts Perdue seeks to avert are not for essential services-the courts, police, and so forth-but for social programs. For instance, $30 million was cut from a program to fund local governmental efforts to purchase land for parks and nature preserves. This is clearly a function that can be handled by privately financed interests, yet Perdue would rather punish a certain segment of taxpayers-smokers-in order to finance benefits for another segment of the population. Call it what you will, it's a redistribution of wealth scheme by any name.

Government financing should be just that: government financing. Taxation is not a proper venue for government officials to engage in half-baked social engineering programs. One of the major impediments towards true tax reform in this country is the inability of almost all politicians—Democrats and Republicans alike—to divorce themselves from the use of tax policy to indulge their personal whims. Tobacco taxes are just the tip of this iceberg. There are other "vice" taxes on alcohol and gambling revenues; so-called tax "credits" that make individuals jump through hoops just to retain a greater portion of the money they already earned; and even double taxes on corporate profits, a policy that discourages capital formation and overall economic growth.

When you think about it, political calls for tax "reform" are meaningless, because most political tax proposals merely reshuffle the social engineering deck. In order to truly "reform" the system, the entire tax code-at the federal, state, and local levels-needs to be erased, and new methods of government financing must be developed from scratch. At the same time, social spending must be radically cut, and ideally, the government should be restored to its classic function of protecting individual rights. Just as we maintain the separation of church and state, America must return to a separation of economics and state-for instance, leaving the question of developing parks and nature conservancies to private interests.

 

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