Why President Obama Hiked Tobacco Taxes?
Nicotine addict, President Obama hiked tobacco taxes
During his campaign, the current US President Barack Obama promised not to hike taxes for the families whose earnings are below $250,000 or even individuals whose earning is under $200,000. However on the Fool’s day comes the announcement of largest increase in tobacco taxes. It is the tobacco taxes that have a direct impact on low-income families as half of all smokers in America hail from poor families. If you don’t smoke you are simply not affected and might be on the contrary quite happy on higher “sin tax”. But, the story and its impact are different for one out of every five Americans who smoke.
Barack Obama, himself a smoker who is trying to quit tobacco, signs a law whereby a pack of cigarettes will cost 62 cents extra and the extra money that will be generated through this will be used on few of his health care plans; initially the child insurance programs. Earlier The President proposed that improved health plans for each American will come from greater taxes levied on the riches, sparing the poor. However, this increased tax on tobacco spells a different impact. There are 2 opinions from sections of the society.
Barack Obama administration must have felt elated of the fact that finally FDA will be in a position to regulate tobacco industry and thus public health will be protected. Again, in early February, President signed a law whereby excise tax on tobacco was tripled. Projected income from this hike in excise taxes is approximately $38 billion within the coming 5 years tenure. But, debate is on as whether this inequality of tax burden is justifiable and fair or not.
Again, cigarette sales contribute towards hefty state revenue in that respect higher taxes imply less generation of cigarette sales. Several economists are of the view that a 10 per cent rise in the price lead to 8 per cent decrease in the unit sales. Barack Obama’s new tobacco tax will translate into a rise of average cigarette price by about 13.3 per cent leading to almost 10.6 per cent decrease in unit sales. This is calculated as over 1 billion dollar of revenue loss. This tobacco tax was not there at all in the presidential campaign run by Obama, so the heated debate will continue for sometime now.
The contentious issue is that smokers are mostly low income family members. This point have been further corroborated with facts from a Gallup survey that concluded 34 per cent of people earning in bracket $6000 to $12,000 were smokers in comparison to only 13 per cent sm$90,000.
On the other hand, anti-smoking proponents advocate that squeezing smokers will help some to quit smoking and young generation to stay away from the puffs. That has already been started and people of America who cannot live without smoking nicotine are feeling the pinch and have cut down to few sticks a day. These people are already looking at other nicotine alternative options and alternate smoking options that can keep their wallets smiling while they can take their daily quota of nicotine.
April 12th, 2009 at 4:53 am
If they are going to charge a sin tax for cigarettes, why not also tax “grease burgers and fries”, sugar, candy, etc. We are told these are all bad for us also. For a little more fairness on these “sin taxes” why not spread it around to include more “sins” and “users”. It is not fair to target just tabacco users. Guess we smokers are just going to have to grown our own!