HARTMANN Burning a Hole in Our Pocket Missouri has no rival in promoting tobacco-tax stupidity
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he following column regarding Missouri is presented to you in response to nothing. No serious legislation is pending on my subject. I’ve received no press releases. No one’s asked about it. As far as I can tell, no one’s even talking about it. The subject is tobacco taxation, and the lack thereof, in the state of Missouri. Our state’s abject stupidity in this regard is not a definite sign of the apocalypse, but it does suggest we’d be raising our hands to perish first were it coming.
First, the bottom line. Missouri presently taxes tobacco sales with an excise tax of 17 cents per pack. That amounts to less than 10 percent of the national average taxation of $1.81 per pack on tobacco. That’s not a misprint: On average, the 49 other states tax their citizens on cigarettes at more than ten times Missouri’s rate. Even more astonishing is this: Missouri could raise its cigarette tax by 70 percent and still rank dead last among the 50 states in tobacco taxation. A 12-cent-perpack increase would put Missouri’s rate at 29 cents per pack. Presently, Virginia, the nation’s third-largest producer of tobacco, is ranked 49th among the states at 30 cents per pack. We could quadruple our rate to 68 cents per pack — potentially generating something like $200 million in new state revenues annually — and we’d still be tied for 40th place with that bastion of progressive sagacity, Mississippi. If anything, I might be understat-
ing this, because cigarette taxes are a moving target — as in moving upward — in those other 49 states. Recently, the Federation of Tax Administrators, with no dog in the fight, published a list of states’ cigarette tax increases from 2000 to 2020. Missouri was the only state not on its list, having last raised its taxes in 1993, the late Gov. Mel Carnahan’s first year in office. That’s right: Missouri is the only state in America not to have raised its cigarette taxes in this millennium. As if that weren’t pitiful enough, no fewer than 38 of those other states have raised their taxes multiple times in the past two decades. Understand that we’re not talking phone change here. In 2018, the most recent year available, the state Department of Revenue reported cigarette tax collections of just under $76 million. Using rough estimates, were Missouri to raise its cigarette tax by just 12 cents per pack, “moving” it from 50th place to 50th
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place among the states in taxation, state revenues would increase by more than $50 million annually. That’s worth repeating: This state could add $50 million per year, every year, and still have the lowest tobacco taxes in America. Some might counter that’s not a fair economic analysis, because people would be forced for economic reasons to purchase fewer cigarettes if you raised their cost. And they would be right: Among the consequences of raising tobacco taxes is that it does tend to reduce tobacco use. And why would that be a bad thing? It would require someone above my pay grade to compute the net economic windfall of raising cigarette taxes. In theory, to calculate the net revenues from a 12 cent hike, you’d start with the additional $50 million in tax revenue, lower that number slightly by a factor related to lesser cigarette spending, then add back in something for the
MARCH 4-10, 2020
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