The hazards and hypocrisy of tobacco regulation and taxation went on full display as a panel of lawmakers grappled with New Orleans’ decision to ban smoking in almost all public places.
The Joint Legislative Committee on the Budget was reviewing the state’s contract with the city to provide $3.6 million to it for public safety services, ostensibly because these increase as a result of the presence of Harrah’s New Orleans Casino, the only land-based casino authorized by the state. The state receives the first $63.6 million earned by the casino, but the first and last $1.8 million of that are supposed to get kicked back to the city as compensation through a separate line item. Harrah’s officials claimed that fiscal year 2016 revenue to the state would be jeopardized, backed by a Louisiana State Police assertions that the city’s new, soon-to-be implemented smoking ban, which would include all New Orleans casinos, could cut revenues by 20 percent, even as that estimate appeared based on assumptions inapplicable to the market.
The figure drew some concern from lawmakers, and led to putting off approval of the annual contract until the Legislature’s regular session began. During that time, the entire Legislature likely will consider increasing tobacco taxes in order to raise revenues to close a budgetary gap in the hundreds of millions of dollars.
Often, supporters of higher tobacco taxes offer as reason for these that these will discourage people from smoking by pricing some users out of the habit. Yet just as often the actual legislation, referring to a number of examples from Louisiana’s recent past (such as in 2009), are just thinly disguised revenue-raising measures as their extra take goes to fund general government functions. Saying one thing while meaning another, in that these hikes really are about more money for government and not so much saving lives, by supporters need not disqualify legislation, but the actual uses to which the proceeds get spent matters because tobacco taxation notoriously underperforms in revenue calculations, and by definition this is wasting in nature; i.e., the more successfully it discourages, the less revenue accrues. Thus, it’s bad policy to use these dollars except to pay for things related to the behavior discouraged, in this instance such as health problems associated with tobacco use.
Yet a surer method to spur cessation of tobacco’s main use, smoking, is to take the approach of limiting it in public, and this greater effectiveness is exactly why policy-makers fret over a potential significant loss of revenue with the ban. Harrah’s hopes to prey on this worry in order to get legislators to intervene on their behalf by slightly changing state law that allows smoking in casinos yet permitting local governments to go further in restrictions to include exclusion of local governments doing that; currently, while several jurisdictions do have more restrictive local laws in place, none have a casino under their jurisdictions covered under that ordinance.
If this carving of an exception were to happen, essentially policy-makers would be trading the salutary impact of reduced smoking in public for lucre. While there are ideologically-defensible reasons to permit smoking in public places – a libertarian argument on the selfish side that says the rights of people voluntarily partaking of the discretionary act of producing tobacco smoke in an environment trumps the liberty of others to have non-fouled air whose health is damaged, or their lives even put at risk, by having to encounter that smoke and making them avoid commerce that can be nondiscretionary for them – saying that health problems believed triggered by secondary smoke are less important than the money government can collect off the activity, either through its taxation or permitting its use to spur other activities taxable by government, is not one of them.
So if the state is serious about addressing the problematic natures both of smoking and an irrational fiscal system that sputters even as the state’s economy does its best to buck the poor economic policy emanating from the White House and its allies over the past six years, any legislation dealing with smoking both tangentially and directly optimally would use both tax and punitive measures to cut down on smoking. Overturning New Orleans’ law as it relates to the land-based or any other casino and/or raising taxes on tobacco and diverting proceeds to anything but ameliorating the negative effects of tobacco use would show a lack of understanding on this account.