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American Morning

Sound Off: Raising Taxes on Cigarettes

Aired February 21, 2002 - 08:42   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: Time now for this morning's "Sound Off." New York Mayor Michael Bloomberg wants to increase the tax on cigarettes to a $1.50 a pack to help close the city's budget gap. Well that could bring the price up to $7 a pack. Bloomberg is not alone, however; lawmakers in at least 23 different states are making moves to raise the so-called sin tax to bring in much-needed revenue. Tobacco companies, of course, are fighting the proposed measures while anti-smoking groups are saying that price hikes are a very effective way to get people to quit. But should budgets be balanced on the backs of smokers?

Joining us now to sound off, from Washington, Michelle Cottle, editor of "The New Republican," and from New York this morning, former congressman John Leboutillier.

Good morning, good to have both of you with us this morning.

JOHN LEBOUTILLIER, FORMER CONGRESSMAN: Good morning.

MICHELLE COTTLE, EDITOR, "THE NEW REPUBLICAN": Hi.

ZAHN: All right, Michelle, I'm going to start with you this morning. I think it's pretty obvious where tobacco companies are coming at from -- on this issue. They're basically saying that this is a way of social engineering. And I actually have a quote from senior vice president of Philip Morris who goes even further than that. Quote -- "When an adult makes a choice, that choice should be respected. I don't think people should be taxed into making a decision they wouldn't otherwise make." Why are they wrong?

COTTLE: I don't understand what the problem is with the social engineering aspect. We social engineer all the time with our taxes. We have luxury taxes and liquor taxes. We give tax credits for children and home mortgages. I'm not sure why this is any different than that.

ZAHN: John, is it?

LEBOUTILLIER: Well it's part of a pattern that's I think a dangerous one, Paula, because if we're going to go down the road of trying to stop smoking by raising taxes on it, first of all, it won't work because what will happen, and it already is happening here in New York, is more and more people don't buy their cigarettes in New York City and therefore pay the 8 cents a pack present sales tax, they go online. I brought with me today reams of sites, online sites, where you can buy cigarettes with no tax whatsoever. What will happen is people will keep buying them, pay no tax into the city or state, which will cost the revenue that they now have and they'll keep smoking.

Is it the job of government to use taxes to stop something that government thinks is bad? If that's the case, make it illegal.

ZAHN: Would you rather see then, John, these cities raise general taxes? I mean they've...

LEBOUTILLIER: How about -- how about...

ZAHN: ... been loath to do that for many years.

LEBOUTILLIER: Well, yes, of course. How about cutting spending? I never hear any government, whether it be Republican or Democrat, anymore ever talk about cutting spending. It's -- the new thing is spend, spend, spend because the hard choices they don't want to make.

ZAHN: Michelle, isn't there some truth to that?

COTTLE: Well sure, in a perfect world everybody would behave and cut their spending and there would be no pork and you know Congress can't do this in Washington. But the truth is, if we're going to cut estate taxes and capital gains taxes and corporate taxes, the money's going to come from somewhere and the cigarette companies with their bad behavior in the past have made themselves a really easy target on this. They're not a very sympathetic victim in this program.

LEBOUTILLIER: Okay, now, Michelle,...

ZAHN: Now, John, let's go back to the point you were making about the Internet trafficking of cigarettes as it is. That ignores the facts that economists have done studies which show basically if you reduce the cost of cigarettes by some 10 percent it leads to reduced consumption by 3 to 4 percent. I mean wouldn't you like to see some people quit smoking here?

LEBOUTILLIER: Of course, I hate smoking, but I think it's a bad thing, too. But I think in America you have the right to do even bad things that are legal if you choose to do them.

If we're going to go down this road, when are we going to start taxing McDonald's and Kentucky Fried Chicken and Taco Bell because they produce high-fat food that's helping to contribute to the wave of obesity that is killing this country? How about sugar products that are causing diabetes? Is it going to be the government's job to say, well, eating a Big Mac and super sizing your French fries is bad so we're going to raise taxes on that? Where does it stop that the government knows all and tells us how to live our lives?

ZAHN: Well, Michelle, I think John raises an interesting issue and that's the issue of a potential slippery slope here.

COTTLE: The slippery slope issue is used with everything that comes up, but the difference between cigarettes and food is that cigarettes are not necessary to live. And this has been used in the argument. I mean, yes, McDonald's is bad for you but food is a necessity. People have to eat, people do not have to smoke. And this is not about the government trying to make people quit. That is an added bonus on some level. The statistics show that young people are more likely to quit when the price of cigarettes go up than the average population. So, yes, that's kind of a side benefit, but the point here is you have to raise the -- you have to raise the taxes on something in order to get the revenue.

LEBOUTILLIER: Paula.

ZAHN: All right, Michelle, though, is there a certain hypocrisy here, though, that the city then will actually be making money off the backs of smokers and not the tobacco companies?

COTTLE: Here again, we do this all...

ZAHN: I guess they both will. I know that the profits would be split, but the fact is both would be raking money off the backs of smokers.

COTTLE: Well sure, but you know states make money off of poor people who buy lottery tickets. In a perfect world, again, you don't have the situation, but you know would you rather them make money off the backs of poor people who got a -- go to buy a loaf of bread? Any kind of consumption tax on some level is regressive, but people aren't willing to have their income taxes raised or their capital gains taxes raised and we've just done away with the estate tax to some degree. So here again, you've got to deal with what the reality of the situation is.

ZAHN: John, jump in here.

LEBOUTILLIER: Well, you know the one other thing, in doing a little bit of research for this segment today, I noticed that over half the online sites that sell cigarettes are based on Indian reservations, both here in New York and around the Midwest. So that when you buy these cigarettes, you're, in effect, putting money in to the Indian reservation, which are another wonderful example of liberalism in this country that attempted to do something for a special group of people, ended up causing miserable conditions for those people. Now they've harped on gambling and cigarette selling as an income source. I wonder if liberals are now going to do something to hurt those people?

ZAHN: Michelle, do you have a problem with what John just said?

COTTLE: I have no idea what he's talking about. We're now dissing (ph) on Indian reservations because the money from cigarettes sold online goes in there. I have -- I'm not sure how to respond to that. I mean obviously some people will go online and buy their cigarettes, just like some people will get black market cigarettes over the border from Canada or wherever.

LEBOUTILLIER: Well, Michelle, the...

COTTLE: But you know the vast majority of people will still go to the store and buy their cigarettes like everyone else.

ZAHN: John, you get the final word this morning.

LEBOUTILLIER: I just think instead of demonizing this habit, although it is a horrible habit, if people choose to hurt themselves by smoking, really that's their business. I think government needs to focus on helping people, providing necessary services and cutting the unbelievable amount of waste that's in city, state and federal government, the duplication. You know that over 50 percent of every dollar earned in this country now goes to taxes to pay for government. And what are we getting for our money? Is it really worth it? Are we getting our money's worth?

ZAHN: Well, Michelle, I think you made the point a little early on, we're not living in a perfect world, are we?

COTTLE: Not today.

ZAHN: All right, Michelle Cottle, John Leboutillier, thank you both for your time this morning. Appreciate you both sounding off.

COTTLE: Thanks, Paula.

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