WASHINGTON – When Sen. Jim Bunning,R-KY.,spoke on the Senate floor Thursday,it came as no surprise that he argued against expanding the State Children's Health Insurance Program,as did many of his Republican colleagues.
But Bunning,the two-term senator from the Bluegrass State,objected to more than just the idea of a “government-run health care system.”
He has a problem with the bill's funding: namely a proposed 61 cent increase in federal taxes on tobacco products.
“The tobacco tax funding mechanism is an irresponsible way to pay for children's health care,” he said. “The increased tax is fundamentally unfair to my state and the surrounding states.”
But the government should worry about more than just the bill's equity. Raising the federal excise tax,he said,would drive away the source of the program's funding by pressing Americans to quit smoking.
The American Cancer Society estimates that for every 10 cent rise in the tobacco tax,4 percent of smokers over 18 quit.
“If we were honest,and truly wanted to fully fund SCHIP spending with a tobacco tax,the federal government would have to encourage people to smoke,” he said.
Tobacco companies,the U.S. Chamber of Commerce and the Tax Foundation,a nonpartisan research group that favors a simple tax system and minimal taxes,joined Bunning in arguing against the tobacco tax increase.
The U.S. Chamber of Commerce sent letters to members of Congress urging them to oppose funding SCHIP through the tobacco tax,because “to target a narrow sector of the U.S. economy with the aim of funding a broad-based entitlement program is grossly unfair and burdensome to American businesses and consumers. It added that such a tax would damage economies in the South,the home to the majority of tobacco-based industries.
Tobacco giant Philip Morris mailed literature to the districts of some legislators who support SCHIP,encouraging voters to call or write to their representatives and call on them to vote against the program.
President Bush proposed a $5 billion increase in the program over five years and has vowed to veto the House and Senate passed version that would raise $35 billion to expand it.
But other than Bunning and conservative think tank the Heritage Foundation,few have questioned the tobacco tax's stability.
“You could envision a point that tobacco taxes are so high,you would have negative revenue,” said Karen Davenport,director of health policy at the Center for American Progress,a progressive think tank. “But I don't know when that point would be.”
Other backers of the bill agree: the increase in the federal excise tax will most likely turn away some smokers,but not enough to undercut funding. The American Cancer Society's estimate that nearly 1.4 million adults would quit and some 1.9 million teenagers would either quit or never start if the bill becomes law leaves more than 43 million Americans with a regular tobacco habit.
A spokeswoman for Sen. Max Baucus,D-Mont.,chair of the Senate Finance Committee,said that budget estimates show the tax base is “sufficient to fund the bill.”
Besides,taxes on tobacco products have risen 70 times in the past 10 years,according to the tobacco corporation Philip Morris. The government raised $7.3 billion last year through the 39 cent federal tax,said Art Resnick,the director of media affairs at the Alcohol and Tobacco Tax and Trade Bureau. The $1 per pack tax is expected to approximately double that sum each year.
Resnick also dismissed the idea that the tax would hurt American businesses,because tobacco companies generally pass the cost of increased taxes along to consumers instead of losing profits,he said.
An untold number of federal programs have money because of the federal excise tax. Most states also earn money by tacking on additional taxes. Virginia collected upwards of $60 million with a 20 cent tax in 2005,while Ohio earned $437 million with a $1.25 tax per pack,according to the Campaign for Tobacco Free Kids.
Forty years ago,more than 40 percent of Americans regularly used tobacco products,according to census data. In 1967,then-Surgeon General Luther Terry released the first government report detailing the dangers of regular tobacco use. Since then,the percentage of Americans with a regular tobacco habit has dropped from 42 to 21.
Smokers have hundreds of ways to quit these days,including government-funded programs,plans from non-profit health groups,myriad products such as nicotine gum or patches and even Web sites run by the tobacco companies. And they also have reason to quit: as of Monday,25 states have enacted laws that prohibit smoking in bars,casinos and restaurants.
Even with the decline,about 45 million Americans still smoke,according to estimates by the Centers for Disease Control and Prevention. The percentage of teenagers who smoke also has declined since the 1960s,but has leveled off in recent years.
“We are very much for the day when people are not smoking,” said Dan Smith,the president of the American Cancer Society Cancer Action Network. “But that day is still far away,unfortunately.”