Raising taxes on booze and cigarettes

As Nevadans suffer hard times, they're earning less and spending less, reducing tax revenues.

The decent response would be for the bureaucracy to tighten its collective belt for the duration. Instead, Carson City Democrats -- and all too many go-along, big-government Republicans -- resemble mutts braying at the cat on the wall as they scramble to find a way to sink their teeth into constituents with even more taxes.

This week it was a hike of 3 percentage points in the hotel room tax. Supposedly that doesn't count, of course, since it "doesn't affect locals," its main impact being merely to drive away pesky tourists.

But Assembly members Sheila Leslie, D-Reno, and Bernie Anderson, D-Sparks, aren't done. Their cigarette and alcohol tax hike bills -- AB255 and AB277, respectively -- would soak Nevadans for additional hundreds of millions of dollars (they figure) in "sin taxes," bumping the price of a pack of taxed cigarettes by $1; a gallon of beer by 53 cents; a gallon of wine by $1.07 and a gallon of hard liquor by a whopping $4.21.

Note the modifier "taxed." Jeremy Aguero, who runs an outfit called Applied Analysis, told the Legislature this week his research shows cigarette purchases dropped from 14.8 million packs to 13.3 million packs per month the last time that tax was increased, back in 2003. But Mr. Aguero confirms he was measuring only sales which were duly reported to state tax authorities. Smokes legally purchased on Indian reservations, or booze and smokes purchased from out-of-state, online suppliers whose record of tax compliance is spotty at best, don't tend to show up in such statistics.

And bootlegging and tax avoidance become more profitable temptations as taxes go up, as well. Add that to the buyers who simply reduce consumption or switch to cheaper brands or untaxed sources in the face of tax-driven price hikes, and actual results might fall considerably short of the $200 million per year the two lawmakers promise from their levies.

Add to this the fact that liquor and cigarette taxes are famously regressive -- they hit the poor hardest, because the poor tend to spend a higher portion of their limited income on such products -- and you have to wonder what the taxaholics are thinking.

"Fifty percent of the alcohol drinking is by people who earn less than $50,000 a year," warns lobbyist Alfredo Alonso, who represents liquor distributors and the R.J. Reynolds Tobacco Co.

Democrats taxing the poor. Oh dear.

Gov. Jim Gibbons has vowed to veto any such tax hikes. Democrats might or might not be able to override. Should they do so, Nevada's "sin taxes" would then be substantially higher than those of the surrounding states. At that point, expect demands for more money for state troopers to spy on those buying beer or smokes across the state line (as Massachusetts already does to those who "sneak across" into low-tax New Hampshire), followed up with roadblocks to catch Nevadans hauling their lower-taxed booty back into the Silver State (as Las Vegas police already try to nab fireworks purchasers returning from Nye County each summer).

But she needs these taxes, Ms. Leslie insists. "I am sick and tired of not being able to fund essential health programs," she said this week.

Health programs for those who live longer because they refuse to smoke and drink -- thus reducing tax revenue? Maybe lawmakers should make the habits mandatory.

Or, alternatively, raise taxes to the roof on gym memberships and exercise equipment -- stuff that encourages Nevadans to stay healthy and live into old age, when the "collective" costs of caring for them really go through the roof.