Monday, March 13, 2006

Cigarette Taxes: Whose Armey?

In yesterday's Daily News the paper prints a point-counterpoint on the question of whether it's good public policy to raise the state and city's cigarette tax. The advocate for the increase, something the Alliance has been commenting on for some time, makes the point that, "Public health authorities have amply documented that every 10% increase in the price of cigarettes causes about 7% of young people who smoke to quit."

Let's parse that sentence. It seems that according to the anti-tobacco advocates, citing other anti-tobacco advocates ("public health authorities"), there is a correlation between the tax increases and a decline in youth smoking. Why would we take the assertions of the ideologically driven as "amply documented"?

We routinely discount assertions of self-interested businesses as biased so why not those who are equally self-interested? Just because an entity is a self-described "public interest" or "public health" group doesn't mean that it is competent do econometric studies or even weigh data in a unbiased way.

What we do know is that smoking among teens has dropped dramatically in this country. And it has done so in low taxed as well as high taxed states. Let's not confuse correlation with causation.

And certainly when there is such a huge black market loophole as the one that exists in New York State it is dangerous to continue to postulate the correlation between taxes and cigarette consumption. Our advocate, however, is undeterred by the facts on the New York ground: he calls the smuggling and tax evasion an "insignificant" problem.

What this shows is that we shouldn't let public health advocates moonlight as financial experts. Only a good government type (or a NYC mayor) could call a $500 million tax evasion problem "insignificant." It is typical for these folks to simply ignore the reality of the black marketeering while continuing to hoist the same questionable data on a gullible public.

And just what did the News have in mind when it asked Dick Armey to craft the rebuttal argument? Armey did do a competent job in raising some of the Alliance's issues, particularly on the harm these taxes do to small businesses. Why didn't the paper go to the folks at NYACS or the Bodega Association? Choosing a right-wing Republican seems to be designed to discredit the point-of-view from the get-go.

In any case it is time to close the Indian loophole. No new tax should be levied until this shameful kowtowing to the threat of Indian violence is ended.