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Tom Weaver: Why a tobacco tax to help end shutdown is smart

  • Article by: TOM WEAVER
  • July 7, 2011 - 9:59 PM

Pundits like to suggest that state government is in crisis because of today's budget deadlock. But in truth the challenges facing Minnesota are no different than the ones faced in Washington or in most state capitals.

Our state and our country are changing. People are getting older while we are producing fewer workers, and our gains in productivity aren't large enough to fill the gap between growth in the users of government services and the relatively flat growth of tax revenue.

As the CEO of an organization that provides valuable services to disadvantaged adults, and as a former regional administrator for the Metropolitan Council, I have a real appreciation for the arguments made on both sides of the political debate.

I firmly believe that government can and should live within its means. Families do, businesses do, and we all struggle to pay higher taxes every year. However, we also cannot ignore the important role government plays in service delivery.

The debate over the size of the state budget is masking a different debate. Regardless of whether your number is $34 billion or $36 billion, how should we tax Minnesotans?

Just as lawmakers shouldn't assume that the same level and types of services are needed every year, they should also evaluate the tax policies used to create the revenue needed to run government.

The smartest tax choice that legislators could make in special session is to raise the price of tobacco. The Minnesota Department of Revenue recently released numbers that show a $1.50 per pack tobacco price increase would raise nearly $400 million during the next two years alone.

That's a number policymakers can trust and an amount that could go a long way toward bridging the gap that remains between the governor and the Legislature.

To his credit, the governor included a tobacco tax increase in a recent offer. Legislative leaders dismissed it out of hand as just another tax increase. But a tobacco price increase would do more than help get us through this budget debate.

It would tackle one of the state's most preventable and costly long-term financial challenges: tobacco use and its harm on Minnesotans. Smoking kills more than 5,100 Minnesotans a year and accounts for almost $3 billion a year in excess health care costs.

Those costs are part of the reason that health care inflation is a major challenge for the state budget -- we spend too much money treating the illnesses caused by tobacco instead of following proven ways of keeping people from smoking.

Fortunately, raising the price of tobacco is one of the best ways to keep youth from starting to smoke. In addition, a $1.50 per pack increase is expected to lead 28,100 current adult smokers to quit.

An increase in the tobacco tax should not be looked upon as just another way to raise new revenue. Proceeds from a tobacco tax increase could be used to offset other taxes that provide disincentives to economic growth (such as the corporate franchise tax) or that stress lower-income households (such as the property tax or some of Minnesota's growing collection of fees).

In fact, lower-income households, which are disproportionately targeted by tobacco company marketing, could get a win-win with this approach -- offsetting another regressive tax while providing an effective incentive to stop smoking.

With a strong majority of Minnesotans supporting a tobacco price increase -- nearly three out of five, according to one recent poll -- policymakers on both sides of the aisle can feel confident that a tobacco price increase is a big step in the right direction.

Tom Weaver is CEO of Achieve Services Inc., and is a board member for ClearWay Minnesota.

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