Senator wants to cut cig tax so he can cut the cure the tax pays for

Smoking directly results in $2.65 billion in annual health care costs in Michigan. In fact, it costs $597 per household, according to the “Cost of Smoking to the Medicare Program,” from the Office of Management & Budget.

So the obvious question is why does Sen. Joe Hune, R-Hamburg Township, want to cut cigarette taxes in half? He also plans to make up the hit to the state budget by cutting Medicaid. Think about this: he wants to cut taxes on something that causes that much damage in order to cut something that repairs the damage it causes. That simply makes no sense, and this is clearly ideological driven. In fact, that is exactly what he told the Livingston County Daily Press & Argus.

“It is largely a philosophical belief that the government thinks that the consumption of alcohol and tobacco is so bad, but government is so addicted to the revenue,” he told the newspaper.

He introduced Senate Bill 517 on June 22, and it was referred to the Senate Finance Committee where it will, hopefully die a natural death.

According to the newspaper, the state tobacco tax brought in $1.04 billion in 2009, the most recent year for which figures were available. That does not come anywhere near paying the $2.65 billon it costs taxpayers.

Not only does Hune want to cut Medicaid, he wants to do it by reducing Medicaid rolls “through more stringent eligibility rules.” He claims “ state’s general fund allocation for Medicaid increased by nearly $1 billion this fiscal year due to what he said are lax qualifications to enroll in the health plan for low-income citizens.”
Gee, Really. It had more to do with the Bush recession- the longest and deepest since the Great Depression – and Michigan’s high unemployment rate.

Judy Putnam, spokeswoman for the Michigan League for Human Services, told the newspaper that low-income senior citizens and children, such as those who exhaust the foster care system, make up the majority of Michiganders on Medicaid. Those would be the people who are hurt. Apparently, they have a weak lobbying group.

The story goes on to say that the “Midland-based Mackinac Center for Public Policy think tank has released reports that state Michigan’s cigarette tax rate has also led to large-scale commercial smuggling from other states that has resulted in reported violence.”

First, it fails to accurately ID the Mackinac Center as the rightwing, anti-union and anti-tax player it is. Every year it releases an annual report on cigarette smuggling as justification for ending the tax. It makes you wonder how much money the tobacco industry is kicking their way. The fact is Michigan is losing $127 to $140 million in tax revenue every single year through illegal cigarette smuggling that is destined for the School Aid Fund and Medicaid.

The problem is it is so easy to forge and steal the tax stamps. In a high-tech world where you can start your care with your phone, they still use low-tech hand stamps. The fairly unsophisticated stamps are sold to Michigan’s 60-70 cigarette wholesalers in a roll of 30,000 stamps costing $60,000 that resembles a roll of paper towels. Not only that, the state spends almost nothing on enforcement. The state has only about four officers of the Michigan State Police Tobacco Smuggling Unit to cover the entire state.

Some high-tech solutions that will save the sate millions in lost revenue have been proposed, but when things like SB 517, it’s easy to see why those measures have never been adopted.

Communications Guru

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