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Taxation is the real issue.

Voting Arkansans across the state are being told that Initiated Act 1, a proposal to place an additional 25-cent tax on cigarettes and other tobacco products, will relieve the profound funding crisis occurring in our dysfunctional health care system.

The backers of the initiative, a group called Coalition for a Healthier Arkansas (CHAR), present voters with appealing objects of benevolence such as the elderly, shut-ins and abused children that the tax is earmarked to help.

CHAR has told the public the tax will benefit all Arkansans and the only people opposing the measure are tobacco company interests. If you've listened to CHAR, you've been misled.

CHAR wants the public to believe that the estimated $68 million revenue pool from the tax will be extra money the state can use to support CHAR's programs. The tax would, however, reduce general revenues substantially, placing a bind on other state programs.

The Arkansas Executive Committee has focused its efforts on discussing proposed Initiated Act 1 as a tax issue with long-range implications for Arkansas' tax policy and immediate impact on Arkansas' general revenues.

Justifiable Concerns

A study released last month by Price Waterhouse entitled "An Estimate of Cross-Border Cigarette Activity and Excise Tax Evasion Patterns in Arkansas" has proven the committee's concerns are justifiable.

Because the sales tax is much cheaper in border states such as Missouri and Kentucky, many people will choose to purchase their cigarettes across state lines. Price Waterhouse estimated that this cross-border activity would cost the state $21.6 million in general revenue.

Additionally, the report examined the domino effect that the tax would likely have on Arkansas retailers.

Typically, a consumer will purchase other items when purchasing cigarettes. These sales could be lost.

With the 25-cent tax imposed, the loss of retail is estimated to be $81.4 million in gross sales revenue related to cigarettes alone. The number is much higher when these secondary products are included.

Bad Government

Should so many businesses and other state programs suffer to benefit the special interests of a few influential groups?

Should Arkansans vote for a tax that sets such a precedent of earmarking for future special-interest groups who want to gain funding for themselves?

Earmarking funds is bad government. A limited supply of tax dollars exists to fund all government operations. Allowing taxes to be earmarked for highly visible and popular programs penalizes less visible but essential programs. The earmarking of funds allows only segments of the population who are enjoying media attention and sympathy to receive tax dollars. It is the role of the Legislature, not special-interest groups, to specify how tax dollars should be spent.

CHAR has attempted to make this into a smoking issue. But this issue is not about whether people should smoke or not. By pairing the initiative with anti-smoking sentiment in the state, CHAR is confusing the real issue: taxation.

Good government does not allow a majority of people to place a tax that they will never pay on a minority, especially since the tax proposes to benefit all Arkansans.

This tax is inequitable, regressive and has dangerous implications regarding future taxation in this state.

Voters should go to the polls on Nov. 3 armed with the whole truth regarding Initiated Act 1 and should cast their votes accordingly.

An educated study of the initiative should leave a voter with but one conclusion: Act 1 is not the answer.

Sherry Walker is a Little Rock political consultant and spokeswoman for the Arkansas Executive Committee, which opposes the Cigarette and Tobacco Products Tax Act.
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Title Annotation:Point-Counterpoint; tobacco taxation
Author:Walker, Sherry
Publication:Arkansas Business
Date:Oct 19, 1992
Previous Article:Does money talk loudest?
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