Carmine
Boal
Assistant Majority Leader, Iowa House of Representatives
From the Iowa House
Week 8, March 4, 2005
To raise the cigarette tax or
not—at the Iowa Capitol this is the question of the day. Why are legislators
struggling over this question when a poll taken by the
Des Moines Register earlier this
year indicated 70 percent of Iowans support raising the tax from 36 cents to
$1.00 per pack? While there are many arguments to be made for both sides, I
believe the decision is difficult because legislators are undecided if the
reason to raise the cigarette tax is to increase tax revenues for the state or
to try to curb the unhealthy habit of smoking.
As I see it, legislators fall
into four categories on this issue. First there are some who will not vote
for a tax increase. There are some in this group who have campaigned on the
pledge they will not raise any
tax so they will not vote for an increase under any circumstances. Their
viewpoint is the state must live within its means and find additional spending
reductions, efficiencies or use revenue growth occurring within the existing
tax structures to fund state government. Others in this category, however,
will not vote to raise the tax because it targets one group of taxpayers, and
is particularly penalizing to low-income people who smoke. A second group of
legislators would consider raising the cigarette tax, but only to pay for
health costs incurred by Medicaid, a government entitlement program which pays
for healthcare of low-income children, disabled and elderly people. A third
group of legislators believes the cigarette tax should be raised because
raising the tax will cause fewer people to begin smoking and cause more
smokers to quit. Finally, a fourth group believes the tax should be raised
for both the additional tax revenue and the effect it has in curbing smoking.
In an attempt to set the
budget over the past few weeks it has become apparent it is not necessary to
raise the cigarette tax to meet the state’s Medicaid costs. In fact, the
proposed budget of the Republican majority in the House would provide $68
million in a supplemental for the current year’s deficit in Medicaid costs, as
well as an additional $129 million for next year’s budget. This includes a
three percent provider increase, as well as a $55 million repayment to the
Senior Living Trust Fund.
Probably one of the most
compelling arguments I have heard for raising the cigarette tax was posed by
the Governor in his State of the State address. He made a point that Iowa
annually spends $253 million for healthcare costs related to tobacco use, yet
only receives $88 million in revenues generated from tobacco products. He
argues that smokers should “pay their own way” for their poor choice in
deciding to smoke resulting in increased health cost to all Iowans.
The Governor cited the
Campaign for Tobacco-Free Kids as the source for his information. In checking
this Washington based lobby group’s web site, it dos in fact back the
Governor’s claim that Medicaid pays $235 million a year for smoking related
diseases in Iowa. The missing information in the Governor’s message,
however, is that Medicaid is a matching fund program. The fact is the state
paid $85.7 million for Medicaid enrollees with smoking related claims, and the
federal government paid $149.2 million, for a
total of $235 million. Therefore,
if current cigarette taxes in Iowa generate $88 million, that is more than
enough to cover the state’s portion of the state/federal match.
So, it’s not necessary to
raise the cigarette tax for budgetary purposes and the tax currently collected
meets the state’s need to cover the costs of tobacco-related costs of Medicaid
entitlements. If it’s not about a need to increase taxes, we’re left with
whether it is a good idea to raise the tax simply to curb smoking.
Quite frankly I believe my
district reflects the Des Moines Register’s polling and for the most part
constituents of my district would not have a problem with increasing the
cigarette tax. I have heard from many Ankeny residents who want to raise the
tax, and from a few smokers who are opposed.
I believe the issue will
ultimately come down to something as simple as the democratic process. The
bottom line is it takes 51 votes in the House, 26 votes in the Senate, and a
signature by the Governor to pass legislation. Looking back to my earlier
breakdown of legislators and their stances, I believe it will come down to how
many legislators are persuaded of the need to increase tax revenues. Based
upon that observation, it is my prediction that at the end of the day there
will be a modest increase in the cigarette tax. As usual, all parties will go
away with a sense of victory and defeat.
I hope you will be able to
join me at the legislative forum scheduled for Saturday, March 12th
at 9:00 a.m. in the Neveln Center.
E-mail:
carmine.boal@legis.state.ia.us
Home
Address: 3301 SW Timber Green Road, Ankeny
Home Phone:
964-3335
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Capitol Phone: 281-3238
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