Rhode Island, like much of the nation, is facing a major fiscal crisis. The state has a projected 2012 deficit of $295 million due mostly to rising costs, declining revenue and the loss of federal stimulus money. In his recent opinions column, Hunter Fast '12 ("Just say ‘no' (to the nanny state)," Feb. 4) would rule out "sin" taxes as a possible solution. I must disagree.
The term "sin" tax is a strange misnomer. All goods and services are not — and have never been — taxed equally, from the first tariffs which disproportionately affected imports, until today.
For example, groceries from the supermarket often have no sales tax, but go and order carrot sticks at your local restaurant and you'll be slapped with an extra 7 percent sales tax. Such is the nature of taxation, even when you are not aware of it. Because corn is highly subsidized at the federal level to the tune of $3 billion a year, that high-fructose corn syrup rich soda has an inherent advantage on its sugared brethren down the aisle. Unequal taxation of goods is everywhere.
However, the idea of "sin" taxes arises when certain goods and services that are unsafe, unhealthy or have negative externalities are taxed disproportionately. In reality, all taxes are a form of "sin" tax. All taxes are applied disproportionately, though it seems Fast singles out the heavy taxation of cigarettes as more reprehensible than, say, taxing restaurant food while leaving grocery store veggies untaxed.
It is true that Rhode Island does have one of the highest cigarette taxes in the country at $3.46 per pack, yet by most metrics, this tax is still way too small. In a study published last year, researchers at Penn State found the true cost of a pack of cigarettes in Rhode Island, when medical costs and loss of productivity are factored in, to be $31.20.
The problem is that the costs of smoking are borne by the whole society and not just those individuals who are making a personal choice. There are the obvious dangers of secondhand smoke, which affects everyone in the vicinity of a smoker — often the children of smokers, who have no choice of parents.
Additionally, there are some pretty significant negative externalities. Smokers who aren't covered by health insurance, or who rely upon Medicaid or Medicare, cost taxpayers millions of dollars each year.
Hospitals cannot refuse to provide medical services to an uninsured smoker dying of lung cancer or heart disease. They are forced to absorb these costs and pass them on by making treatment costs even more expensive for those who can afford to pay.
And smoking is bad for the economy too. Poor health means missed days of work, and early death means reduced tax revenue. A healthy workforce is a more productive work force, which means more money for the state and less taxes on other goods. Taxing cigarettes is a win for the economy as a whole in the long run.
However, Fast does rightly point out that high taxes, especially those with great disparity across state lines, will foster black markets and hurt businesses near the border. This is especially problematic for a state like Rhode Island, where its tiny size makes it easy for would-be smugglers to take that short drive into Massachusetts.
However, instead of decrying the high taxation in Rhode Island, we should be wondering, "Why aren't the taxes in other states just as high?" It isn't like fiscal crisis and smoking's public health implications are issues that are bound by the Ocean State's borders.
The real issue with Fast's decision to rule out so-called "sin" taxes — and especially smoking — is that he offers no alternative solution to solving Rhode Island's deficit. The money has to come from somewhere. Is Fast suggesting that smokers should get a break while teachers are laid off? Or, perhaps in a spirit of solidarity, he is offering to send Governor Lincoln Chafee '75 P'14 a check to replace the lost revenues from a cigarette tax.
Goods and services have never been taxed equally. A complex array of taxes and subsidies, tax credits and deductions exists to help certain sectors of the economy and protect consumers from unhealthy or destructive behaviors.
Taxing cigarettes at higher rates than other goods is smart policy because it does not just bring in revenue for the state, but also leads to the decreased health care costs and increased revenues from greater productivity that are the direct benefits of a healthier and longer-lived workforce. The money has to come from somewhere — better from deadly cigarettes than my carrot sticks.
Ethan Tobias '12 is a biology concentrator from New York. He can be reached at Ethan_Tobias@brown.edu.
