A recent Pew Research Center report revealed that Idaho has some of the lowest revenue collected from sin taxes in the United States included in the total state budget, ranking 44th.
In terms of state revenue, sin taxes, also known as excise taxes, account for 2 percent of the state’s budget. Alcohol sales are only 0.2 percent of this, while tobacco sales and gambling revenue make up 0.9 percent.
Nevada was listed as number one on the list with 12 percent of annual state revenue coming from sin taxes, while West Virginia, a similar-sized state to Idaho, ranked number three at 8 percent.
According to the Pew report, even with these economic numbers, states shouldn’t rely on the sin tax to account for revenue. Nationwide, tobacco excise tax totals totaled $14.3 billion, while alcohol tax revenue brought in $9.6 billion.
Sin taxes remain a controversial subject throughout the country. Some argue it’s a way to rid the public of vices. But according to the Pew report, that is not always the best method.
“This is the paradox of sin taxes, the class of taxes that includes tobacco. These extra dollars and cents levied on products and activities considered detrimental to consumers — traditionally tobacco, alcohol, and gambling — are intended to accomplish two contradictory goals: Like all taxes, they generate revenue for the taxing entity, but they also aim to deter the behavior being taxed — which can ultimately negate the first goal,” the report said.
Becky Iannodda, a national spokeswoman for Mothers Against Drunk Driving, believes, however, that sin taxes are necessary to help improve public health and safety.
“MADD supports a prevention component to health care reform and supports a substantial increase in taxation on alcoholic beverages as a means of covering the cost to society caused by misuse of alcohol and as a means of supporting prevention programs including countermeasures to alcohol-impaired driving,” she said.
Other groups such as the Distilled Spirits Council and cigarette lobbies are strongly opposed to any increases, arguing that a raise in the sin tax is an affront to a citizen’s rights, and viewed as punishment for their personal choice.
In 2012, when the Idaho Legislature was considering raising the tax on cigarettes, Joshua Culling, then the Idaho State Affairs manager for Americans for Tax Reform, wrote a letter to the editor in the Post Register saying the measure would “hurt Idaho small businesses, as well as the state’s economy.”
And in Republican-dominated Idaho there seems to be little support for increasing the sin taxes from their current level.
State Sen. Brent Hill said the lack of support for a sin tax increase is mostly due to the general stigma of raising taxes.
“It’s just that strong reluctance to place that higher tax burden on our citizens, regardless of what kind of tax it is,” he said.
Hill said he would be open to considering a hike in the excise taxes but only if a proper plan was put in place.
“Whether I would support an increase in those taxes or not depends on how the whole thing is put together,” he said. “Would that be in exchange for other taxes? Would that tax be earmarked for some important programs we’re lacking in such as public education? I certainly would consider it in that case.
“Just to raise the tax to try and get people to give up those habits, no, I would not do it for those reasons.”
There hasn’t been a real push to raise the tax on cigarettes since 2012. That year, members of the House Revenue and Taxation Committee voted 11-5 to kill a bill that would have increased the tax on cigarettes by $1.25 per pack.
The bill was pushed by the American Cancer Society and championed by former state Rep. Dennis Lake of Blackfoot.
Idaho’s cigarette tax of 57 cents per pack, which hasn’t been raised since 2003, is 45th in the nation. Idaho raked in nearly $36 million in tax revenue from the cigarette taxes last year.
Comparatively, West Virginia’s cigarette tax of $1.20 netted the state around $95 million. West Virginia has about 1.816 million residents compared to Idaho’s 1.717 million but it brings in $59 million more per year in cigarette taxes alone than the Gem State does.