The Arkansas Democrat-Gazette this morning reports on UAMS’ plans for use of some $10 million a year it received from the legislature this year to establish a cancer research institute. Transparency is promised, though specific plans are still in process. Meanwhile, I’d like to provide transparency on where the money is coming from.
A passing reference in the article said the funds will be raised “largely through tobacco and e-cigarette taxes ”
Blog readers know why this caught my eye. As I’ve reported several times, tobacco lobbyists effectively wrote much of this legislation.
First: The new law provides no e-cigarette taxes. There still are no such taxes in Arkansas, apart from the general state sales tax on vaping materials. The bill originally included a tax on vaping liquid. It was amended out. Other bills to add a vaping tax were killed, with opposition particularly strong in the House and the House speaker-controlled Rules Committee.
Tobacco taxes? The legislation provided no new tobacco taxes, except through the elimination of preferential tax treatment of cigarette sales in areas bordering Missouri, Tennessee and Louisiana. There, convenience stores and such have collected tobacco taxes at a rate matching those lower taxing states. That break has been eliminated.
Here’s the financial analysis by the Department of Finance and Administration on the bill. It estimated this flow of money in the first fiscal year the law is in effect.
- $2.5 million from the new tax on medical marijuana. Cannabis is not tobacco.
- $2.4 million from an increased tax on “cigarette” rolling papers. No analysis was done, but I’d wager much of that money comes from people purchasing papers to roll cannabis, not tobacco.
- $1.15 million in sales taxes on cigarettes. This is not strictly a tobacco tax, but reflects new money from a change in the formula for setting retail tobacco prices. The change in the formula will provide a higher profit margin for retailers and thus increase the retail price. Smokers will pay a sales tax on retailers’ increased profit.
- $170,000 from an increased sales tax on the higher price of cigarettes in border areas.
- $3.1 million from the state’s ability to collect a higher tobacco tax in border areas.
Tobacco taxes will purely pay about half the cost by this analysis, with border city smokers shouldering a major chunk of the burden. (Shout out to West Memphis smokers!)
E-cigarette users, the growth part of the industry and the part the lobby worked hardest to protect, pay nothing new. Indeed, as originally written, the bill included a tax BREAK for a new form of nicotine delivery recently approved by the FDA (IOSQ), but that was amended out after cancer-fighting lobbyists howled.
DFA noted, by the way, that millions in tobacco taxes will be lost from those who quit rather than pay higher taxes and from the imposition of a 21-year-old age floor for tobacco purchases.
About that new age requirement: It will be phased in, another sop to the tobacco lobby. The legislation also banned local ordinances to regulate tobacco sales and use, a huge win for the tobacco lobby. The legislature also stripped the state Tobacco Control Board of regulatory powers. (Legislators argued pertinent control laws weren’t being enforced anyway. Laws? Who needs ’em?)
It’s not in the legislation but the money for UAMS came with another cost — suppression of free speech. Cancer fighters who depend on public paychecks were gagged during the debate lest they mention some uncomfortable aspects of the legislation.
Stipulated: UAMS needs financial support and the cancer institute could encourage important grant-producing work. The legislature is past due in providing the state’s great medical teaching institution the financial support it requires.
Perhaps it’s just me, but I still think cadging money on the fringes with the help of tobacco lobby trickery is no way to sustain a public institution, particularly a program devoted to treating diseases caused by the lobbyists’ product.
We should openly, directly and happily provide general revenue (tax) support for services we value at the level they need. Not just health care, but education, prisons and other human welfare. We don’t. (Well, occasionally we demonstrate that many believe highways are more important than people.)