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News-Sentinel.com Your Town. Your Voice.
Opening Arguments

The demand curve

According to a new poll, 62 percent of Hoosiers would support a $1 increase in the cigarette tax if the money were used for health initiatives (of course, the poll was commissioned by a coalition of anti-smoking groups, so there might be a little "getting the results they wanted to get" going on here). This news must have stunned Gov. Daniels, who keeps getting thumped for suggesting even a 25-cent hike, and it should give pause even to those who see smokers as the preferred target group of sinners for getting more endless amounts of new money. Whenever a price increase is contemplated for any product (such as newspapers, which I know a little about), there are very carefully done studies to pinpoint the price increase that would be the most workable. Every increment of increase will bring in x amount of new money but would decrease demand by y amount, decreasing current revenues. They usually arrive at a precise price increase for which it is determined that the amount of new revenue will exceed the loss of current revenue -- go one step above that, and there will be a net loss.

Granted, predicting the behavior of smokers isn't quite so easy since tobacco is, you know, addictive and all. Still, history tells us that price increases decrease smoking, and a $1 jump all at once might be a little risky in terms of killing off the goose with the golden eggs.

So to speak.

Comments

tim zank
Tue, 01/23/2007 - 9:11am

I have been asking that question for years, what will you do for a revenue stream when you've done completely away with smoking? That money will have to be replaced by taxing the bejesus out of something else then. Maybe even something non-smokers hold dear.

I guess the good news is, since they are going to force me to quit smoking, I'll live long enough to say "I told you so" when the nannies come after their vices and habits they don't like.

Steve Towsley
Tue, 01/23/2007 - 1:11pm

Smoking addicts are still far more likely to pay any price increase than other folks who are able to weigh a price hike objectively, i.e., without the addict's craving for the product at any price.

If the side effect of increased cost of cigarettes is fewer smokers, then we have created a health benefit which smokers who become non-smokers will eventually capitulate to thank us for.

As for whom we will tax if smoking becomes a thing of the past, I've never met a politician who had any trouble figuring out what else to tax.

tim zank
Tue, 01/23/2007 - 2:04pm

Steve, let me capitulate now and thank you ahead of time, in case I get hit by lightning, or a bus or something else bad happens to me before you and the government get your chance to save me from myself.
Your 2nd paragraph:
"If the side effect of increased cost of cigarettes is fewer smokers, then we have created a health benefit which smokers who become non-smokers will eventually capitulate to thank us for.

Your 2nd paragraph in 10 years:
If the side effect of increased cost of cheeseburgers is fewer cheeseburger eaters, then we have created a health benefit which cheeseburger eaters who become non-cheeseburger eaters will eventually capitulate to thank us for.

Wow! It's so nice to know someone cares!

Steve Towsley
Tue, 01/23/2007 - 4:58pm

Tim -

I'll trust the American people with my cheeseburgers before I'd trust smokers to accommodate my need for smoke-free air where both of us congregate. It's too bad this needs to be legislated at all, but people are people, if that makes any sense.

tim zank
Tue, 01/23/2007 - 5:32pm

Steve, there is no need(or legal basis) to legislate as long as people have FREE WILL to congregate, there is a CHOICE as to where to congregate, the product is LEGAL and the property is PRIVATE.

This is one of those issues that really brings out the Libertarian in me.

Steve Towsley
Tue, 01/23/2007 - 8:38pm

I have no argument in principle, but as with other freedoms we enjoy, there are practical limits.

In this case, I think it's sufficient to point out that the research has been done to confirm that we are talking about the spread of a slow poison. You and I may randomly CHOOSE to meet at the same PRIVATE enterprise. None of that implies any right of either of us to toxify the other, whether it's by nuclear radiation or carcinogens in smoke.

It's easier to see the point, probably, when one uses an example like carrying plutonium or anthrax around in one's pockets, but the effect of spreading large amounts of toxins into the air is still the same, and still seems to be something smokers don't really get, regardless.

I can eat cheeseburgers all day and it won't hurt anybody but me, no matter how close you get or how bad the ventilation at the grille. Big brother is a lot less likely to ban my burger based on any hard-headed scientific proof of a clear and present public health hazard.

tim zank
Wed, 01/24/2007 - 8:54am

Steve, while I'm sure we can agree second hand smoke is not good for anybody, it's a far cry from claiming weekends at Piere's is going put you in an iron lung.

If the argument is truly a health issue (this time) then the scientific case should be made and proven. It simply has not. And spare me the 4000 carcinogens argument, new carpet has that too.

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