Clear goals needed for any tobacco tax hike
Editorial published, The Knoxville News Sentinel, March 13, 2006

The only tax that has any chance of passing the Tennessee Legislature this year or next appears to be an increase in the tax on tobacco products - and then only with the provision that the new money will help someone or some group needing it.

The key question will be who benefits from the newfound tax money. And that question might cause enough of a problem to keep the issue away from the House and Senate floor for a while - certainly in an election year. Tennesseans for Fair Taxation and other groups would like to reduce or end the state's tax on food. They claim that Tennessee has the nation's highest average food tax at 8.4 percent and one of the lowest cigarette taxes at 20 cents a pack. The national average for the cigarette tax is more than 90 cents.

Last year, according to state Department of Revenue figures, the state collected $443.4 million - nearly 5 percent of its annual revenues - from the tax on groceries. At the same time, the tax on cigarettes brought in $121.2 million.

Reducing the tax on groceries in Tennessee also has been an object of groups who support an individual income tax, but reduction of the food tax alone was not enough to sway support either among lawmakers or citizens generally.

Other states - neighboring Georgia is usually cited as an example - have greatly reduced or have phased out their taxes on groceries. Georgia began the phase-out 10 years ago, ending the practice in 1998. Meanwhile, Gov. Phil Bredesen has other ideas for the money that raising the tax on cigarettes would bring. The governor would like to use the funds to offset the rising cost of health care for the state's working poor.

The population Bredesen would target includes those who lack health insurance but earn too much to be considered for TennCare, the state's expanded Medicaid program that covers 1.2 million Tennesseans who are indigent, uninsured or disabled.

Proposals to increase the cigarette tax emerge in the Legislature with more frequency than they did when tobacco was not only popular but when taxes on the product were so low as to be almost nonexistent. Now, with the disastrous health effects of tobacco widely known and other tobacco-growing states like Virginia and Kentucky raising or considering raising taxes on the product, it is no longer safe from taxation in Tennessee.

And, given the antipathy toward almost any other kind of tax in Tennessee, taxing tobacco is about the only game in town in that particular sport. As far as the proposals offered at this time, we can see the merits of both. Lowering the tax on food can help many lower-income individuals and families who pay the same food tax as those who are more affluent. At the same time, helping shore up the safety net for those who need health care would be a good use of the money.

If the state's politicians are too shy to approve raising the tobacco tax in an election year, the least they can do is form a legislative study committee to determine the best use of the tax money. Maybe they can find some means to provide for both good purposes, but some clearly stated goals are needed.

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