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Drink, Smoke and
Gamble ... for the Children!
Government's "vice to virtue" taxes to fund our schools
Matthew J. Brouillette
"A serious moral failing."
That is the American Heritage Dictionary definition of "vice." While I would
rather liken my own proclivity for adult beverages, a good Caribbean cigar, and
a friendly bet on the golf course to a "foible: A minor weakness or failing of
character," the reality is that drinking alcohol, smoking, and gambling used to
be considered, well, vices in American culture.
Indeed, Pennsylvania law continues to try to discourage children from engaging
in these vices too early in life by putting age limits on purchases of beer,
wine, cigarettes, and lottery tickets. Yet, more and more, government is
relying on taxes on these "sins" to fund popular government programs such as our
public schools and prescription drugs for the elderly.
But can we really turn our vices into virtues?
In 2002, Pennsylvania politicians raised the cigarette tax 223 percent "for the
children." The Schweiker administration told us that raising the per-pack tax
from $0.31 to $1 would start saving lives and discourage our kids from sneaking
smokes behind the school building. And oh, it also gave Harrisburg politicians
at least $600 million more in spending money.
The irony is that the very same politicians who want fewer people to smoke also
plan to make smoking the state's golden goose. They, of course, see no
contradiction between discouraging smoking and becoming increasingly dependent
on it to fund government programs. But what would happen if people actually
quit? First, we'd subsidize the tobacco industry!
Governor Rendell--while supportive of another doubling of the cigarette tax--has
set his heart on other vices for taxation: beer and gambling. The governor's $5
billion "Plan for a New Pennsylvania" is dependent, in part, on tax revenues
from a 213 percent increase in the "Beer Tax" and a 35 percent take of slot
machine winnings at horse racetracks across Pennsylvania. According to the
administration, increased taxes on our suds and revenues from government-granted
gambling monopolies would generate $350 million in the coming fiscal year. In
addition, "reckless drivers" would also provide another $64 million, primarily
through increased penalties for moving violations.
Interestingly, the state actually doesn't need any of this additional tax
revenue to fill a budget deficit. In late March, Governor Rendell signed a
balanced budget into law without these new taxes. So why does the governor want
to raise taxes? "For the children"--of course!
U.S. Secretary of Education Rod Paige recently wrote in USA Today that "No idea
in politics has hurt children more than the false and misleading idea that the
quality of education is determined by how much we spend." Yet, Governor Rendell
will simply pump hundreds of millions of additional tax dollars into a public
school system that is already provided the third highest per-pupil revenue in
the nation, when adjusted for the cost of living.
Although more dollars have failed to purchase more scholars in the Commonwealth
(Pennsylvania currently ranks 46th in the nation on the SAT college entrance
exam, and between 30 and 51 percent of the Class of 2003 were not "Proficient"
on the state's writing, reading and math portions of the state's basic skills
test), Governor Rendell's plan "invests up to $1.25 billion in proven programs
that will boost student achievement." Maybe the governor will prove Secretary
Paige wrong. But somehow I doubt it.
Given the state's longstanding habit of sending greater than the rate of
inflation increases in tax dollars to the public schools, Governor Rendell and
supporters can only hope that Pennsylvanians' nicotine, alcohol, and gambling
habits grow. Indeed, with the highest business taxes in the nation (slated to
rise by $8.65 billion over the next 8 years) and the 27th highest personal
income taxes (before the governor's proposed 34 percent increase), it is these
kinds of vices that more and more Pennsylvanians will need to acquire if we
intend to keep the supply of tax dollars up with the demand for them in
Harrisburg.
Of course, politicians get away with these schemes because these vices can be
taxed with the least amount of political pain. Yet if they are successful at
dissuading people from indulging themselves, the revenues will eventually go up
in smoke, dry up, or be gambled away altogether.
The reason Pennsylvania politicians have entered this no-win game is their
failure to control the growth of taxes and their own addiction to spending other
people's money. So instead of working harder to find places to reduce
expenditures, they're looking to raise taxes on people's vices. Of course, the
"don't tax you, don't tax me, tax the man behind the tree" approach will only
work for so long. But apparently Pennsylvania politicians don't expect it to
fail anytime soon.
In fact, when Governor Rendell was Candidate Rendell in 2002, he was asked if he
would consider legalizing brothels--you know, prostitution parlors--in
Pennsylvania if projected revenues from gambling never materialized. However,
instead of dismissing the tongue-in-cheek question, his response suggested at
least the possibility that sex-for-sale could be on the table if public opinion
polling numbers start to pick up.
Like gambling, drinking, and smoking, maybe prostitution will soon no longer be
considered a "serious moral failing" and will one day start helping to cover the
ever-increasing costs of not-educating our children. Now that would truly be
trying to turn vice into virtue!
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Matthew J. Brouillette is president of The Commonwealth Foundation, a
free-market public policy research and educational institute based in
Harrisburg. For more information, visit
www.CommonwealthFoundation.org.
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