The 20,000% Tax Increase


Having smoked the last cigar in my humidor recently, I decided to stop at my local tobacco shop — Jon's Pipe Shop — and pick up a cigar. I settled on Hoyo de Monterrey's Excalibur No. III and I walked out of the store six dollars poorer. While in the city of Champaign, IL, I conversed with the owner and employees about several different tobacco-related topics — including smoking bans and tax increases. It seems smokers just can't get a break.

Now, as a brief background, the city of Champaign has been jerked around as of late by politicians on the issue of tobacco. Last year, the city council voted to ban smoking in bars and restaurants, with the ban taking effect in January of this year. In May of this year, after two new anti-smoking ban candidates were elected to the city council, the ban was repealed. But alas, Governor Blagojevich, our scandal-ridden, fearless leader, and the Illinois legislature, the two of which are almost always at odds, incidentally, came together to do what politicians do best — expand the role of government. So, despite the brief reprise that Champaign has gotten from needless paternalism (is there any other kind?), come next January bars all across Illinois will have to put up no-smoking signs. The only point to my visiting bars was to smoke a cigar with friends, given that a glass of scotch tastes just as good at home as at the bars and costs significantly less. The bars have, through no fault of their own, lost my business.

Now, if that wasn't bad enough, there is a similarly odious bill brewing in the United States that would mandate a 20,000+% increase in the tax on cigars as well as a less exorbitant increase in the tax on cigarettes. (For those who have not heard about this, you might think the percentage listed above may be a typo — I would say you have too much faith in government.) Now, while politicians, and federal politicians in particular, may love to extend their own power (with one notable exception — Dr. Ron Paul), they are not stupid. The increase in taxes on cigars would be a part of a bill to renew the State Children's Health Insurance Program. Now, if that isn't a brilliant stroke, I don't know what is!

After all, who could possibly be against giving health care to poor, uninsured children? Well, of course, those heartless libertarians, but who else? Besides, the program already exists, it just needs to be reauthorized. What would we tell those children who would be cut out of the program? Even those otherwise inclined against socialized health care, it seems, could be easily turned against their own instincts.

A large number of organizations have come out in support of the reauthorization of this program. The linked story includes this telling line: "The American Medical Association could use an increase in federal tobacco tax for funding the SCHIP program." Well then, who could say no to the AMA? The saddest inclusions on that list are surely all those Catholic organizations. The fact that the Church and its adherents worked so hard to set up so many hospitals in Medieval Europe aimed at providing health care to the poor was, to me, always one of the greatest testaments to its benevolence and fidelity to Christ's teachings (see Thomas E. Wood's excellent How the Catholic Church Built Western Civilization). Now, however, Catholic Charities receives two-thirds of its annual budget from government grants and such. They're on the government dole and they like it. It seems that charitable health care can only be provided with assistance from the state. One might say it's a shame that so few people contribute to charity that so much money must come from the government. But, honestly, why would anyone donate when they know their taxes already do that for them (as Charles Murray would tell us)?

Jacob Sullum over at Reason has already looked at who the increased tobacco tax will actually hurt and who SCHIP would actually help, so I won't deal with that. There are several other observations that I'd like to make.

First, poorer cigar smokers would no longer be able to afford cigars. By "poorer" I mean all non-fat cats. The Excalibur I mentioned earlier would cost me around $15 with the proposed tax. In my four years of smoking, I dished that much out for a stick maybe two or three times. They were big occasions. At Jon's Pipe Shop, the majority of people buying cigars in there are college students, both undergrads and graduate students. I highly doubt they can absorb a $10 increase per cigar. I know I can't. I'm sure some smokers better off than myself can continue to enjoy cigars, including whatever cigar smokers there are in the federal legislature.

Cigars taste great and are a great way to relax, but I don't need cigars. But what does it matter if cigars are a necessity or not? Imagine if politicians tried to tax some other non-essential, yet enjoyable (to some), product, such as fast food. I don't think McDonald's, Wendy's, Burger King, or their consumers would take kindly to $10 cheeseburgers. But given our culture's current hyperventilation over obesity it would seem to me just as appropriate as a tobacco tax. But as Sullum said in his column, "everybody hates smokers." Too true. It's the modern sin, and we smokers are desperately in need of repentance. But politicians don't want to eradicate those sinners whose weakness is cigarettes, given that there are so many of them and they are such a cash cow. But the cigar industry is a relatively small one in the world of American tobacco, so targeting them is easy. Maybe, if the politicians are lucky, all those former cigar smokers will make a mass exodus to cigarettes (ha!).

Finally, perhaps the craziest thing about the whole situation is that Bush may veto the reauthorization if it makes it to his desk. Our "conservative" president's love affair with big government is well-documented. But on this issue he has said that reauthorization would amount to a "massive expansion of the federal role" in health care. Well, that's certainly a refreshing sentiment to hear from him, and I'd love to be able to continue smoking my cigars, but I'll believe it when I see it. Until then, I'll enjoy my cigars while I still can.

July 28, 2007