Tobacco tax plan bad for state

The Petition for Tobacco Tax Increase was touted as a tax increase on smokers, but it really would be an unfunded mandate on all taxpayers. The proposed amendment would create two new programs: one to provide health care services to poor patients and another to supplement the fees paid to doctors by Medicaid. These programs would be very expensive, and the cigarette tax revenue probably would be woefully inadequate to pay for them.

Some of the revenue would go toward providing health care to households with incomes below 200 percent of the poverty level. The proposed amendment doesn’t say which patients would have priority or which medical expenses would be funded first. There’s no word on how the state would make up the shortfall if the cigarette tax revenue didn’t fully fund the program.
The proposal would also make it a constitutional requirement to maintain physicians’ Medicaid payments at the level of Medicare payments. The cost of the program depends on how much physicians charge. If physicians’ rates went up, the state’s bill would skyrocket.

The state can’t pay for health care for some Missourians and then turn other people away if the programs turn out to be too expensive. An amendment that says tax revenue will go toward health care is really a promise to pay for health care, no matter how little revenue comes in.
The Petition for Tobacco Tax Increase would write this unfunded mandate into Missouri’s constitution. This cigarette tax wouldn’t be just a tax on smokers; it would be a major tax increase on everyone in Missouri.

— Tim Lee
Editor for the Show-Me Institute, St. Louis
(Editor’s note: This is an updated version of Lee’s original letter.)