The great financial minds in Washington are at it again, starting another war. As usual, it is “for our own good” and will make twenty-eight per cent. of the adult population miserable while destroying a large industry and reducing tax revenues sharply. Does legislation get any better than that?
This time they’re making war on another weed, one that has been a favorite in America since before the time of Pocahontas. The Nicotine Nazis are on the rampage and propose to turn tobacco over to the FDA to “regulate.” The FDA intends to start by mandating the removal of all additives, including menthol, and my girlish laughter is going to dissipate as the smoke does.
Since the sound byte medical types and MSM are convinced that smoking is worse than sex was to Victorians most citizens will doubtless think prohibiting tobacco (the real proposal; regulation by the FDA is merely the first step) is a fine solution that will lower health-care-related costs even though the jihad of the last thirty years has had no effect. The usual Liberal logic was applied: you may not smoke, but all diseases are tobacco-caused so either you are ill because of “second hand smoke” or you took a puff behind the woodshed when you were thirteen and forty years later you got cancer because of it. Smoking has become the easy, automatic answer for cause of death and is probably implicated in cases of suicide and car crashes.
This isn’t about making Linda snarl at the world; we’re interested in the economic effects–which will be catastrophic. Ten years ago I spent $72/month on my two-pack-a-day habit. Taxes have been piled on to the point that the carton of cigarettes that cost nine dollars then is well over fifty now. Think of that as fifty buck lattes or fifty buck movie tickets.
“Sin” taxes are a favorite for revenue and those of us who enjoy a little tot of Irish or a glass or two of (heart healthy) red wine are subject to truly sinful and prejudicial new taxes–at least one raised recently by 537% by Mr. “I’m not going to raise your taxes unless you make a quarter of a million a year.” We got the usual equal treatment before the law: all smokers and drinkers are penalized.
Has anyone consulted the Carolinas to see what effect knocking R J Reynolds off the Big Board is going to have?
What about the shareholders there and of P. Lorillard and others? What about my solicitous neighbors who voted a ten dollar a carton tax last year to procure more “social services” before Mr. Obama added his ten dollar a carton tax to already outrageously punitive fees? The loss in tax revenue will be enormous and governments don’t understand about reducing spending when income falls. Adjusted for inflation something like eighty per cent. of our cherished smokes are pure tax revenue, and guess what? Non-smokers are going to have to “sacrifice” to make up for that loss.
A black market will surely spring up, which may account for the BATF ruling that all purchases of fifty cartons or more must be reported to them! Even if all taxes are paid. Seriously. You have to fill out a form including your license plate number and full personal data.
Travel and tourism…a higher percentage of Europeans and those from the Middle East smoke and I know what my rule is: if I can’t smoke, I don’t go. How appreciative are New York, Las Vegas, and Miami going to be when the French and Germans say “non” and “nein?” Who cares how good the exchange rate is if a monsieur can’t even buy a pack of Galoises or an American brand or smoke within twenty-five feet of a doorway? Will there be revenuers, so to speak, wandering around the country hunting tobacco patches and sniffing the air? Why not? There are some of those jobs Mr. Obama claims he is going to create. Will foreigners get special dispensations or will customs confiscate their cigarettes for failing to meet US standards?
Attempts to legislate morality and lifestyles always fail and always have nasty consequences. If there hadn’t been prohibition Joe Kennedy would never have made a fortune running rum and we would have been spared Teddy in the Senate all these years. Why not ban sugar, which is far worse for you than fat, and ban the substitutes too? (Because the Stevia producers do not have the lobbies that sugar, Equal, and Splenda do.) Put enough social engineers to work and we could wind up with everyone in the country loathing everyone else and set new records for assault and battery.
Most of you probably don’t smoke and don’t see what the fuss is about; you even believe my health will improve if I am treated like a toddler. (Will I live longer if I stop smoking? No, but it will seem that way. Mostly, it is my choice, not the government’s.) My bleeding ox may not move you, but how do you feel about the proposal you be taxed for every mile you drive? I don’t drive a hundred miles a month, while lots of you drive several thousand. Will you like having your car fitted with a device that records your mileage (at your own expense) and allows the government to track your every move? They don’t intend to lower the incredible taxes on gasoline, either. It will be argued that you deserve it because you are using more than your fair share of the gasoline and doing more than your fair share of wearing out the roads.
You know how it goes, people: when you don’t protest when it happens to us, they’ll come after your butter, cheese, salt, red meat, Cokes, cell ‘phones, and roofs that are any color other than white. In times past coffee, tea, and chocolate have all been taxed and chances are that most of you regard one of the three as an invigorating “must have.” They look like prime targets for revenue-hungry governments once the evil weed is outlawed.
Laissez faire, people, laissez faire. Let’s all take responsibility for our own choices and pay for our own vices and stop regulating and taxing others for theirs.
Let us hope that wiser–or more rapacious–heads prevail in the latest campaign of the war against tobacco.
Linda Brady Traynham
June 10, 2009
P.S.: Now to business. You could call your broker this morning and sell tobacco short before it occurs to a lot of people that the proposed policy would destroy another large industry and a major source of income. Even though I expect a fall in tobacco stocks I’m more inclined to think we should hold off until we see what sort of support Dr./Senator C can garner. There could be some good short-hold bargains to be picked up but your timing will need to be impeccable–and keep a firm eye on your “greed” gene. Maybe scoop up a handful when the gloom is deepest but promise yourself faithfully that you’ll dump it when you have a modest profit.
I’d have to look at current prices and what tobacco stocks have done for at least the last year, but I’d be feeling pretty antsy when I had a twenty-five per cent. profit, and I’d begin charting volumn and price daily when I was ten per cent. up. By the time a stock had recovered half it had lost it would take a squad of Marines to keep me from selling. Nuthin’ wrong with a quick little ten to fifteen per cent., you know, and a lot right about it.
As volatile as the market has been you can lose, get lucky, or make your decisions ahead of time. I have never lost serious money by selling too soon; I’ve lost it by not having faith in my judgement and buying or by not paying attention and missing a major sell signal.
How about a quick identity check? I’m a trader, the spiritual descendent of robber barons, and believe in hoisting the Jolly Roger, a quick capture, putting a prize crew on board, and on to the next opportunity. How many of you think in terms of “investing” “for the long term?” My bet is that most of you are traders who believe in stashing spare cash in metal or you wouldn’t be here.