In a few hours, Chicago residents will be paying $10.5 million more for bottled water, due to the implementation of the 5-cent-per-bottle tax we blogged about here. We wrote:
So why did the council enact a five-cent tax on bottled water? Is it defensible under any principle of sound tax policy? ... [The mayor] just wanted to raise revenue via an arbitrary tax source that has no justification to be used as a general revenue source. And if you can believe this, another reason that was actually cited in a previous article when this issue was first being debated was that the city was upset that people were buying bottled water and not purchasing the water via the city's monopoly on tap water.
Maybe we spoke too soon: the tax will soon be challenged in court:
[The plaintiffs will be the] American Beverage Association, the International Bottled Water Association, the Illinois Retail Merchants Association and the Illinois Food Retailers Association....
Illinois Beverage Association Executive Director Tim Bramlet said that after appeals to the City Council to vote down the tax failed, a lawsuit was the next recourse. The associations, which Bramlet said will be represented by Jenner & Block in a suit to be filed in Cook County Circuit Court, claim the tax is illegal based on existing statutes that prohibit the state from singling out a specific food product with a specialized tax.
"State law prohibits the City of Chicago from imposing a tax on a single product like they have done with this bottled water tax," Bramlet said. "If this tax is allowed to go into effect, then what is to preclude the City Council from deciding to tax salad dressing or lawn mowers?"
The statute to which Bramlet refers may be 65 Ill. Comp. Stat. 5/8-3-5, which reads that:
All taxes levied by a municipality, except special assessments for local improvements, shall be uniform upon all taxable property and persons within the limits of the municipality, and no property shall be exempt therefrom other than such property as may be exempt from taxation under the constitution and general laws of the State.
The state treats bottled water no differently from other food, so the city's action of singling it out for a special tax may indeed run afoul of this state law. The lawsuit is expected to be filed sometime in January.
As we've reported before, Maryland's cigarette tax is doubling to $2 per pack as of Tuesday. The Washington Examiner lays out the math:
"Sales are going to drop all over Maryland, I'm sure," said Ragu Nanthan, an employee at TJ Beer Wine and Liquors on New Hampshire Avenue in Takoma Park. The regular price for a pack of Marlboros at the shop ran $4.97 on Friday. On Tuesday, that cost will spike to $6.35, he said.
Nationally, the price per pack of cigarettes is expected to hit $4.63 on Tuesday, said Vince Willmore, vice president for communications for the Campaign for Tobacco-Free Kids. In D.C., the average is expected to be $4.64. In Virginia, smokers will pay an average $3.84 per pack.
So, two cartons, with 20 packs and 400 cigarettes, would sell for $127 in Maryland but only $77 in Virginia. Our previous report on illegal cigarette smuggling showed it was on the rise because of high cigarette taxes, and in this case, such an illegal transaction could net the smuggler a lucrative $50, or 65 percent profit. Plus there's online smuggling too.
The Examiner article also quotes a citizens health group that advocated the initiative as a way to "help deter as many as 50,000 children from becoming smokers." But why stop there-banning cigarettes would stop even more children from becoming smokers. The group also is happy that the money raised will go for general health care programs, but again, why hit smokers with a suspiciously round dollar increase to fund general state spending?
Of course, the real reason for the cigarette tax hike is that smokers are a politically unfavored minority that can loaded with higher taxes to fund unrelated government spending programs for the majority. So too with taxing alcohol to fund public transit, taxing bottled water to fund general spending, and taxing video games to fund juvenile detention facilities. And that's just in the last week.
Allegheny County, PA, the home of Pittsburgh, is set to ring in the new year tonight with a new tax on poured alcohol drinks. And a judge has ruled that the tax will go into effect at 12:01 a.m. (as scheduled) despite the fact that it may lead to administrative headaches for establishments. From Pennlive.com:
Allegheny County bars and restaurants will be ringing in more than the New Year at midnight.
They'll also be ringing up an extra 10 percent per drink they serve, when the county's new poured drink tax takes effect.
Some bars and restaurants sued last week hoping to delay the tax, but a county judge says it will begin as scheduled at 12:01 a.m. Tuesday. The business owners had argued they aren't prepared to begin collecting the tax that soon.
This alcohol tax is supposed to fund Pittsburgh-area public transportation. Why tax alcohol to fund public transit? Who knows? It really has no justification in sound public finance policy. It has just been decided by politicians in the Pittsburgh area that they should tax a special product arbitrarily decided upon by the county board to fund some general program.
Maybe Allegheny County will impose a special tax on Terrible Towels next. Such a policy would make about as much sense as a special drinks tax. But if public health is the argument, then if I were Primanti Brothers, I would hold onto my wallets.
(Finally, how can you do this to Steeler fans who two weeks from now may need a lot to drink if/when they go into New England to face the Patriots?)
No comments:
Post a Comment