Missouri, like other states, has had the fiscal wind knocked out of it by the pandemic. Looking ahead at the tough financial decisions facing the state in the future, there’s one that should be easy: Raise Missouri’s lowest-in-the-nation tobacco tax. It should have been done even before there was a budget crisis. To fail to do it now would be governmental malpractice.
As in all 49 other U.S. states, Missouri has seen its tax revenue nosedive due to pandemic-related business closures or reductions, even as its health care costs rise because of coronavirus infections. Net general revenue in May was down 22% from the same period a year earlier, and total revenue for the fiscal year ending June 30 is down more than 7%.
Federal emergency funds have offset some of that, but not nearly enough, and Congress looks unlikely to get its act together to offer the further fiscal bailouts that state budgets need. The real-world results in Missouri are planned budget cuts of some $450 million, much of it from public schools and universities.
Where to turn? The state’s tobacco tax is an obvious possibility. Missouri’s tax is just 17 cents per cigarette pack, the same amount it’s been for more than a quarter century and the lowest in America. Compare that to some neighboring states: Kansas, $1.29 per pack. Arkansas, $1.15. Iowa, $1.36. Illinois, $2.98.
Missouri requires a statewide vote for major tax hikes, and multiple attempts have been made and failed to up the cigarette tax in recent years. But those attempts have arguably been thwarted by issues other than the simple question of whether those taxes should go up.
In 2016, for example, there were two competing cigarette tax hikes on the state ballot, one of them supported by big tobacco because it was stacked against smaller companies. The whole debate got further skewed by ballot language that looped in the controversial issue of stem-cell research. Voters could be forgiven for walking away in exasperation.
With health consciousness always on the rise and Missouri’s fiscal problems hitting schools and kids, a clean, simple ballot proposal to hike the per-pack tax significantly would stand a real chance of passage — if Gov. Mike Parson and other ruling Republicans were to get behind it. Depending on the level set, it could raise hundreds of millions of dollars a year. The worst-case scenario is there would be diminishing tax revenue as people quit smoking rather than pay the tax. But even that would create its own benefit in lower illnesses and health care costs.
There’s really no loser in this scenario except the tobacco companies and, frankly, no one should lose sleep over that. In times when feelings of helplessness abound, this is one reasonable, proactive step Missouri’s leaders could take to help.
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