Anyway, Brummett did some quick math skills in his head while listening to the governor and made an interesting discovery about Beebe’s proposed tax hike on cigarettes, confirmed later with a wink from the governor. Brummett blogs,
“We’re going to create three trauma centers and a statewide trauma system. It’ll cost $28 million. We’re going to raise the cigarette tax at least 50 cents a pack to do that. That’ll raise an estimated $71 million.
There’s a spare $43 million. We’re going to run that through the General Fund and appropriate it for Medicaid, for existing health programs and new ones, such as home health care and community mental health for kids.
Arkansas’ Medicaid money gets matched 3-to-1 by the federal government, even without special Medicaid money perhaps to flow from any federal economic stimulus.
In other words, Beebe wants to turn a 50-cent cigarette pack tax into a trauma system with $43 million left over that could be turned into nearly $170 million, which would plug our Medicaid holes, even expand Medicaid programs, and relieve pressure elsewhere on the budget in this time of uncertainty."
It seems Brummett thinks this is a smart move by Gov. Beebe to funnel a little extra money into the state coffers and squeeze a little extra out the feds in the process. However, it seems to me that the Gov. Beebe is raising taxes three times higher than what he needs to fund the program that he is promoting. If the state trauma system is needed, then okay but why tax smokers three times more than needed just because you can.
UPDATE – Rep. Steve Harrelson from Texarkana points out on his blog (which is a very good blog by the way) that the current 59 cents a pack tax in Arkansas is much lower than the $1.41 a pack in Texas, and it still would be lower with the proposed 50 cent increase. Hey, since Texas has no state income tax, I am all for modeling our tax system after theirs, but let's not pick and choose only the items taxed higher than ours.
UPDATE II - Although careful to not mention me by name, Brummett responds today with another post. You can click the link to read it but to sum it up, he likes the tax. Money quote, "Beebe said he’d heard that it’d require a $7 a pack tax to recover all the costs to government of tobacco-related diseases. " Hmm, so I guess this first 50 cents is just the start.
My compliant with this is really two fold. First, although it sounds like the story is starting to change, the original rational for the tax was the trauma system but the tax is much higher than needed for the program. Second, if the real reason for the tax is social engineering through taxation, then I disagree with this on political philosophy grounds. Our tax policy should not be designed to dictate what behavior the government feels is acceptable. If Gov. Beebe feels cigarettes are so bad for Arkansans, then have to courage to deal with this issue directly. Of course, he is not going to propose banning them or limiting their use; no one would sign on for that. So why is it acceptable to do this indirectly through our tax policy?