Written April 14, 1999
Everybody knows that the tobacco companies make billions in blood money from the sale of deadly cigarettes, right? Would you like to know who makes even more profit on each pack sold? Government.
In 1998 the average tobacco industry profit on a pack of smokes was $0.23. Not to be outdone, the feds pocket another $0.24 a pack and the average state tax was $0.36. That’s right, with each pack of cigarettes sold, federal and state governments make more than two and one-half times as much profit as the tobacco companies themselves. And are they satisfied? No. Cigarette taxes are rising. The federal tax will be $0.39 by 2002 and and the oh-so principled Bill Clinton wants to tack another $0.55 on top of that. State taxes are rising too. California’s cigarette tax rose by $0.50 a pack in January of 1999.
State governments, not content with their cigarette tax revenue, want the tobacco companies’ share of the loot too. They sued and won a settlement that will cost the tobacco industry some ten billion dollars a year. And Uncle Sam wants his share as well. Clinton says he wants to sue tobacco companies for hundreds of billions of dollars. Does this make sense? For years the federal government has subsidized the tobacco industry and now they want to sue? Is this a case of the pot calling the kettle black or what?
Doesn’t it seem strange that government makes most of the profits from cigarette sales but the tobacco industry takes all the heat? Isn’t there just a bit of culpability on government’s part? And don’t government bigshots realize that by sueing tobacco companies they could be killing the tobacco industry?
Of course, once government has successfully killed this Golden Goose, they’ll be looking for something else to tax to make up for the shortfall caused by the loss of cigarette tax revenue. Fatty Foods? Carbs?