Amendment 72 -
The Association has received numerous calls from our members and the press asking why a group that represents fuel distributors and convenience store owners would be against a tobacco tax increase.
Here is a very involved answer why:
Amendment 72 seeks to increase the excise tax on tobacco. Excise tax itself can take many different forms but generally speaking the most common “day-to-day” types of excise taxes that we pay are based on the premise of “consumption.” Things like alcohol, motor fuel, and tobacco fall into this category. Excise taxes are targeted at specific activities because of the following principle: ”Why should someone that doesn’t use or consume a product subsidize the societal costs of people who do?” Another way to look at it is” if you don’t use it you don’t pay it.” This “if you don’t use it you don’t pay it” idea makes excise tax increases a popular and an easy “yes vote” for people that don’t consume the product and expect people that do to “pay their own way.”
Amendment 72 has to do with tobacco. However, tobacco can be an emotional debate so let us begin by framing this discussion over something less polarizing.
Motor fuel is assessed both Colorado and Federal excise tax. Fuel excise taxes primarily, at least in Colorado, are generally used to maintain our highway system including maintenance, construction and enforcement. In this way, the Colorado legislature and our citizens have determined that fuel excise taxes should be used for things related to fuel consumption.
In policy circles at the legislature, there can be a great deal of argument over the appropriate uses of fuel excise tax. For example, are bike lanes an appropriate use of highway tax dollars? Does taking money out of road construction and maintenance to subsidize RTD and transit benefit people who pay fuel excise tax? Should people who ride buses on Highway 36 be able to utilize shoulder lanes, passing the people stuck in traffic who paid the fuel excise tax that paid for the shoulder lane and subsidized the ridership of RTD, in the first place? Should we toll highway lanes that excise tax was used to build and maintain? Should driver’s license offices be funded by fuel excise tax?
The salient question becomes “What constitutes appropriate, and do our citizens and the elected officials charged with oversight of the programs funded by fuel excise tax have the authority to direct the money entrusted to them by the taxpayers?”
Back to Amendment 72…
The number one reason that CWPMA opposes amendment 72 is the lack of oversight by taxpayers and our elected officials over the programs that are funded by it. Make no mistake, you are not considering a $315,000,000 tax increase for the general good of the state, but only for very specific targeted groups that have funded a signature gathering effort to prop up their programs. The programs that have anything to do with tobacco are generally administered by the Colorado Department of Health. These “Tobacco Related” programs that have been funded previously and continually by Amendment 35 and now dramatically increased by the proposed Amendment 72 have been subject to state audits that have raised serious questions about the appropriateness of the dollars being utilized.
Key finding from the State Auditor performance report in July of 2012
AUDIT CONCERN The Department should ensure its grants for the Tobacco Education, Prevention, and Cessation (Tobacco Prevention) Program and the Cancer, Cardiovascular Disease, and Chronic Pulmonary Disease Prevention, Early Detection, and Treatment (CCPD) Program comply with Colorado constitutional and statutory requirements, and improve its processes for selecting, managing, and tracking grants.
KEY FACTS AND FINDINGS
To the Department’s “credit” they have addressed some of the sloppy grant award procedures that were being utilized by CDPHE, however serious questions remain including the lack of a formalized attorney general’s opinion about the appropriateness of grant dollars to be utilized for political advocacy or lobbying.
Recommendation 1: Seek a written Attorney General opinion on whether awarding Tobacco Prevention Program grant funds for policy initiatives complies with the intent of the State Constitution and statute. If these initiatives are determined to be outside the scope of the Constitution and statute, the Department should either discontinue its practice of funding policy initiatives or work with the General Assembly to seek the statutory authority to use grant funds for this purpose.
Agency Response: Disagree
Now the proponents of Amendment 72, many of whom are grant awardees of the Colorado Department of Health’s Tobacco Cessation and Prevention Program, are coming to Colorado voters for a $315,000,000 raise. Shouldn’t Colorado voters be assured that money that should be used for cancer treatment, underage education and prevention, family services, and substance abuse programs, is actually being used for that and not for political initiatives without the express consent of the General Assembly? Again, we cannot help but raise the question of how much oversight does the general assembly really have over these programs.
Remember that the money being asked of Colorado by Amendment 72 is locked in for these programs forever. Think about that. It doesn’t matter how many State Audit’s find problems with the programs, they still get their money. It doesn’t matter if the programs are found to be duplicative, wasteful, or don’t meet the statutory intent when they were established, they still get their money. Colorado voters are being asked to issue this $315,000,000 raise, forever. In four year’s…. that’s over a billion dollars to government programs with no fiscal accountability, because they are getting there money from the constitution and not the legislature, forever.
At least some of the money that Amendment 72 seeks to raise from tobacco users will go to tobacco related programs. If the programs were well run and had sufficient budgetary and policy control from our elected officials, we certainly wouldn’t disagree with the amendment to the degree that we do, but that isn’t the extent of the issues with amendment 72.
Our association, our member’s, and our industry support our Veteran’s. Almost all families in Colorado are impacted in some way by people choosing to serve our country. Supporting our veterans is a moral and societal responsibility that is shared by everyone, not just people who smoke. The fact that amendment 72 supporters are directing money towards veterans is an important point that shouldn’t be ignored, and if they were only directing tobacco excise tax revenue increases towards veterans that smoke that would be a better policy argument, but they are not. Asking the tobacco using population to do more than their share for our veterans should shine a light that all of us are not doing enough.
We also acknowledge that our veterans have an above average rate of smoking and substance abuse, and to that end veterans who smoke, should amendment 72 pass will pay more of their costs associated with that choice. Again though, consider the fundamental nature of excise taxes...they are consumption directed. If you smoke more, you pay more. Logically then, if the state and current program grantees were utilizing existing revenue responsibly, then veterans who smoke would be getting services proportional to their use. This is an example of how excise taxes are self-correct when used responsibly.
We note that Amendment 72 supporters didn’t ask for a general sales tax increase to pay for veteran programs. Instead they are asking for only tobacco users to carry the weight of badly needed additional funding for veteran programs, a weight we as citizens of Colorado, including those of use that don’t smoke, have a moral responsibility to equally carry.
Helping Health Centers in Rural Colorado
The proponents of Amendment 72 have also put a present on their tax increase for the folks that serve the medical needs in rural Colorado.
“Many health centers in rural and underserved communities can’t pay for the urgent renovation and construction and the basic health care technology and equipment they need to meet the needs of their patients. This measure provides money to meet those needs, allowing health centers to see more patients and provide better care.
These same communities also face significant hurdles in recruiting and retaining health care professionals, particularly in dental and mental health. This measure will expand the pipeline of available health care providers by funding programs that repay student loans and provide training for health care professionals.”
Again, similar to veterans, a very laudable goal and one that the state needs to take a look at doing a better job of funding. Amendment 72 asks tobacco users to bear to cost of providing these badly needed services in Colorado’s rural communities. While we acknowledge there are certainly people in rural parts of the state that use tobacco, what is the point of tobacco excise tax payers paying to recruit an OBGYN for example? Other states in the country do a variety of things such as forgive student loan debt, or provide housing incentives to attract doctors and nurses to less populated parts of their states. But we guess in Colorado according to the backers of Amendment 72, it seems to be the responsibility of tobacco users to take care of the doctor and nursing shortage in our less populated communities.
And finally, a little bit of “Soapbox” on behavioral taxation generally
Excise taxes are consumption taxes and if the current consumption does not meet the cost that the government has to pay to provide the services associated with the product then it is appropriate to consider tax increases. However the money from excise taxes should only go to mitigate the impact of consumption. Does amendment 72 meet this “test” with the “plethora of piñata’s” funded by this measure?
Amendment 72 is based on a virulent political philosophy. This philosophy takes this simple premise of a consumption tax and infects it with “behavioral tax policy.” The fundamental problem with using the taxation powers of government to control behavior by penalizing purchases is this: People in Colorado don’t like it when other people try to get the government to control their lives.
It is not a stretch to say that every single pack of cigarettes, and every tobacco product of any kind, has some kind of warning label on it. Anyone that can read, or watch those fun commercials of the girl tearing her face off to buy a pack of cigarettes probably can deduce that using tobacco might not be great move for your long-term health. The groups proposing 72 don’t need an additional 315 million tax dollars to “let people in on this amazing revelation.”
Regardless, our Association stands on the side of giving people the choice to control their own lives, and against using behavioral taxation of any kind to penalize you for your choices.
Amendment 72 could be easily rephrased as a soda, candy, alcohol, gun, ammunition, motor fuel, carbon, or severance tax.
It is the privilege of the proponents to try to convince you that their 315 million dollar behavioral tax increase, locked into the constitution, into programs that have been the subject of intense political scrutiny, with no opportunity for our elected officials to divert the funding for any other pressing need, to bring this ballot measure before you.
It is your privilege to consider what activity or behavior that you might enjoy will be next on their behavioral tax policy hit list.