As you may know, Council is spending most of today debating various tax proposals to fill a projected $150 million budget gap. One idea that hasn't gotten much attention is Councilman Darell Clarke's proposal to tax smokeless tobacco, cigars, and pipe tobacco, which was endorsed by the adminstration earlier today. There are two reasons for the lack of debate. First, the amount of money that would be generated by the proposal is only about $4 million. Second, many tobacco products are already taxed, so it's not that big a deal.
But there is something worth noting about the tobacco tax: Though the product is different, it has essentially the same structure as the soda tax. Instead of collecting the tax when tobacco is purchased, through a sales tax -- a change which would require state approval -- the city will impose a higher Business Privilege Tax on merchants who sell smokeless tobacco.
What's the problem with this approach? From a public health perspective, there is no guarantee that retailers will actually pass along the increase to tobacco consumers, so we should be realistic about the impact this will have on unhealthy behavior. Also, we should acknowledge that this tax, like the soda tax, will require businesses to set up new systems to track and report the sale of these products.
All that said, the tobacco tax is smaller than the soda tax, so the burden on merchants won't be as heavy. Thus, it might provide a good opportunity to test out taxes that use the BPT to encourage healthier choices. If it works, we can be more confident about taxing soda and other such products.