Baldacci Admin Demands Taxes/Penalites for Online Cigarette
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According to the Journal of the American Medical Assn, Smokers Pay For the Externalities
Author: David Strom
May 23, 2005PLYMOUTH"”Do smokers pay their way or not? That is becoming one of the key questions this legislative session.In the wake of a proposal to add a "Health Impact Fee" of 75 cents a pack put on the table by Governor Pawlenty, everybody is asking "Is this a tax or a fee?" If smokers impose large, uncompensated costs upon society through their actions, perhaps asking them to pony up more money to pay those costs may be fair. If they cover those costs, it probably doesn't make any sense to ask them to pay more.Currently, smokers pay a 48 cent a pack tax plus a "distributor license fee" that is paid by wholesalers of tobacco products. Federal taxes on cigarettes amount to another 39 cents a pack. In addition, smokers are currently funding the tobacco settlements across the country, amounting to hundreds of billions of dollars.According to a study published in the Journal of the American Medical Association, the societal costs of smoking amount to about 15-24 cents a pack in 1986 dollars, or 27-43 cents a pack in 2005 dollars. Those costs are obviously substantially less than the taxes charged by the state and federal governments and being paid for by smokers through the tobacco settlements"”amounting to 64 cents a pack in 1998. This year alone the state is getting about $200 million in tobacco settlement dollars from smokers, adding up to $1.6 billion paid into state coffers since 1998. Tobacco products are also subject to the 6.5% sales tax."Smokers are getting reamed already," said David Strom. "Blue Cross and the tobacco tax advocates are smoking something if they are trying to argue that smokers aren't paying their way already. They are already paying about $1.60 a pack in direct and indirect taxes to the government per pack.""Compared to the high-end estimate of social costs per pack of cigarettes put out by the Journal of the American Medical Association of 43 cents a pack, smokers are subsidizing non-smokers to the tune of over a $1 a pack. Adding another 75 cents a pack is highway robbery!" said Strom."Hitting smokers with another tax may be the most politically popular solution to the budget impasse, but it sure isn't fair! The average retail price of a pack of smokes is $3.81 today"”adding another $.75 is highway robbery."Given that smokers are disproportionately lower-income, this is also one of the most regressive taxes you can raise," Strom added.The "health impact fee" on cigarettes also opens a can of worms; sugar, corn syrup, trans-fatty acids, saturated fats, and a whole host of other foods are known to have adverse health effects. "What next, a twinkie tax?" asked Strom.
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Bangor Daily NewsCigarette tax bills to target Net sales
Mainers can expect to pay interest also
Monday, May 23, 2005 - Bangor Daily News
By Meg Haskell, Of the NEWS StaffAUGUSTA - By the end of the year, an estimated 5,000 to 6,000 Mainers will receive a letter from Maine Revenue Services billing them for sales and cigarette taxes for smokes they bought on the Internet from companies across the country.With Maine's tax on cigarettes at a dollar a pack, the tax bills going to buyers could be significant, he said. In addition to the specific tax on cigarettes, Maine also assesses the 5 percent sales and use tax on cigarettes.“We will be billing for both taxes that are due and the interest from when they bought the cigarettes,†said Errol Dearborn, director of compliance at Maine Revenue Services.He estimates the state will collect at least $250,000 from the effort that got under way six months ago. Under federal law, Maine can get the sales records of Internet sellers by going to court. The state is also benefiting from similar enforcement efforts in other states.“I expect we will get hammered when people start getting these letters,†said Sen. Joe Perry, D-Bangor. Perry is the co-chairman of the Legislature's Taxation Committee.“I think it is important for people to know that when they buy cigarettes from out of state, they still owe the taxes on those cigarettes. People will be upset, and I know I will be getting calls, but the taxes are due and Maine Revenue Services is doing their job.â€Sen. Jonathan Courtney, R-Sanford, said he opposed the stepped-up enforcement efforts when the tax committee discussed them last year.“We didn't think the way to balance the governor's budget was on the backs of people harassed by Maine Revenue Services,†he said.Courtney said he has no doubt people will complain to lawmakers when they receive the bills from the state, and he said they are right to complain.Maine is billing for taxes due plus interest. A decision to levy penalties would be made at a “higher level†in MRS.“We are talking about more than $12 a carton [in taxes],†Perr said. “That is going to really add up for someone that is a heavy smoker.â€The states got a boost earlier this year in their efforts to curb online sales when the credit card industry agreed to stop allowing the use of credit cards for the purchase of tobacco products over the Internet.Dearborn said it would be very difficult to reach all of the Internet sellers even with the cooperation of other states and the federal government.Full story
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