Monday, June 26, 2017

Tobacco Tax Faces Court Battle

Tobacco Company Files Lawsuit
Against Illegal Cigarette "Fee"

  SB 845 was one of the many illegally passed bills that raised revenue, AKA taxes, without a supermajority of the legislature and without a vote of the people and also passed in the last five days of the session. Not only that, the bill originated in the Senate and all revenue bills MUST originate as House bills. The House controls the purse strings so that alone is enough to stop the bill in court.

  The $1.50 "fee" was earlier rejected as a tax in the House so the Senate picked up the same bill and passed it and sent it to the House after re labeling it as a "fee" which legally has been held to be a re couping of costs for a government function. A wide load permit fee is one example, or a fee for staying overnight in a state campground or park.

  Philipp Morris and RJ Reynolds tobacco companies weren't having any part of the illegally passed bill so they filed suit stating the obvious; the bill violated the state constitutional prohibition against passing revenue-raising measures in the final five days of a legislative session and without a super majority of lawmakers. The legislation was passed with the emergency clause so the bill goes into law in August and is expected to pump about 20 million per month into state coffers with most of the revenue going into the newly created Health Care Enhancement Fund which is supposed to be used to reduce cigarette use and reduce health care costs.

  Of course we already spend hundreds of millions of dollars each year through the Tobacco Settlement Fund for reducing smoking, it is one of the largest make work agencies in the state, a haven for out of work ex legislators. Yeah, we got it, the smoking reduction part of the legislation was added for cover, a fig leaf to claim there is some government service being delivered to the smokers. Kind of like passing a new fee that paid state park rangers to walk about with clubs beating campers in their campgrounds in order to prevent them from camping.....

  What the money is about is paying for medical care for people that refuse to work a job that pays enough to survive. That keeps wages low, that keeps customers coming into the hospitals and doctor clinics, all paid for by the taxpayers if they can't tax someone or something at a higher rate. The rat would increase to about $2.50 per pack so you are looking at $25.00 to $50.00 per carton of cigarettes, more than enough to encourage smuggling into the states. You are looking at about one cubic foot per 20 cartons of cigarettes or $500 to $1,000.00 per cubic foot of space. Imagine the profit on smuggling in a car truck of cigarettes. This is nearly drug lord level profits.
And talk about strange bedfellows, the Oklahoman had an editorial that agreed with us, mentioning SQ 640 in 1992 that set the super majority requirement for tax increases or a vote of the people and made it illegal to pass revenue bills in the final five days of session. The languge in SQ 640 was clear "any bill passed by the Legislature intended to raise revenue for support of state government."
These bills collectively will raise hundreds of millions of dollars to support the government and using word games or claiming it changes the tax rate or caps deductions is a fools errand if we have an honest court. The court has already said that SQ 640 doesn't apply to raising fees but most of the fees were doubled in 2016 and many more were doubled in 2017 so the RINOs are out of options on raising fees and desperate for money in order to continue the lucrative tax credits and low tax rates on oil and gas. The 2011 attempt to collect a one percent fee on health insurance plans in order to fund Medicaid was shot down by the Supreme Court after the court pointed out that it was indeed a tax, not a fee in exchange for government services so for the Supreme Court to do otherwise with these latest lawsuits is going to be a tough to do without losing public confidence in the court. That same year civil filing fees were struck down by the court because the money was used to fund DHS's child abuse accounts and victim services.
While this chicanery was going on the budget bill of 6.8 billion dollars passed without any real debate or wasted spending removal, just raise the taxes and fees.

This merely points out that not only is a special session likely, it also points out that both House and Senate leadership failed miserably at the simple task of following the law. Don't be surprised if leadership in both chambers doesn't find themselves defending their jobs before the next session ensues.