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Ted Lillie, St. Paul, Published October 12 2013

Letter: Minn. tobacco tax regressive and dishonest

It was with some amusement that I read The Forum’s editorial (“Minn. tax on tobacco is a health tax,” Oct. 5) about how great the new state of Minnesota’s increase in the cigarette tax is. After all, who stands to benefit more from the differential in tax rates than our neighbors just across the border?

But there is nothing amusing about how the new cigarette tax is affecting low-income Minnesotans. While the Dayton administration constantly praises Minnesota’s tax system as being among the most “progressive,” cigarette taxes are widely known to be the most regressive. The Center for Disease Control and Prevention estimates that 34 percent of adults in Minnesota who earn less than $15,000 are smokers, whereas only 12.9 percent of adults who earn $50,000 or more are smokers.

The editorial claims lower sales as proof of the tax’s “success.” But total state tax-paid cigarette sales in Minnesota have already been decreasing 6 percent annually for the past 10 years.

We should ask: To what extent is this happening on its own and not by adding even more taxes on those who can least afford it? To what extent is this due to the fact that some people have devised ways to avoid the tax by illegal cross-border purchasing?

This outsized tax increase turns otherwise honest citizens into lawbreakers and encourages other criminal enterprises that come with a black market. The average pack-a-day smoker will save $700 to $1,200 annually by bringing their cartons back from a visit to a convenience store in North Dakota or South Dakota. According to retailers and wholesalers who serve the border areas, this shift started happening almost immediately after the tax went into effect.

The editorial states: “There is no sin in public policy that aims to improve and protect health.” So if the state claims that the goal is health, it can do whatever it wants? I don’t think most Minnesotans would agree with that statement. What’s next? Corn? Sugar from beets? Milk? Red meat? I suspect that when the micromanaging targets products closer to home, The Forum and others might begin to object.

Forum readers should have no doubt that this tax was sold in the backrooms of the Capitol with the original purpose of creating more tax revenue, and the supposed health effect was assumed to be a side benefit. It is disingenuous for legislators to argue that the ultimate goal of the tobacco tax was to improve health of Minnesota’s smokers knowing full well that this regressive tax was their keystone link to balance the state budget and to fund the Vikings stadium.


Lillie is president, Taxpayers League of Minnesota.