Kentucky, the state that made me get an egg license, is in the news again because it is complaining that it is not getting its fair share of the tobacco settlement funds, and so needs to increase cigarette taxes even more.
Don't feel guilty if you can't actually remember what the settlement was about other than just more tax money. The settlement was the result of a series of lawsuits from state AG's against cigarette companies arguing that use of their product is costing the states money in the form of higher medical costs (the health care as Trojan horse for total government control argument I have discussed before). The substantially increased taxes on cigarettes was supposed to both deter use and to raise money for state health care.
Well, check out this statement form the Kentucky governor as to why he wants to raise the cigarette taxes, and notice what justifications for the taxes are NOT there:
The additional revenue from the tobacco settlement,
according to [governor] Fletcher, would increase the state's debt capacity and
allow for more spending on more projects, such as an information
technology research center and expanding the Big Bone Lick State Park.
He also says the added revenue would allow the state "to ease the tax
burden on small businesses."
I do have to admit that "Big Bone Lick" state park seems the perfect monument to government taxation.
This is a great example of the perverse incentives "sin" taxes put on government. First put in place to reduce some behavior, once government officials become addicted to the spending the tax allows, the government tends to shift posture to supporting, rather than reducing, the "sin" since its continued existence is required to maintain tax revenues. This is happening all over with the tobacco settlement, as government has suddenly become the tobacco companies' partner in maintaining revenues and market share. And here I wrote about a similar occurrence.
Postscript: By the way, not accounted for by the governor in his "fair share" of settlement funds are the large subsidies that flow to Kentucky tobacco growers. In surely one of the best examples of how most government programs are all about rent-seeking rather than whatever their stated purpose is, the US is vigorously taxing tobacco, ostensibly to reduce its use, while at the same time aggressively subsidizing the production of tobacco.