From the Houston Chronicle: http://www.chron.com/cs/CDA/ssistory.mpl/editorial/robison/2497530

April 11, 2004, 12:26AM



Perry's love-hate affair with sin taxes


By CLAY ROBISON
Copyright 2004 Houston Chronicle
In may be naughty, but state government, in its own ambivalent way, couldn't live without it.

In unveiling a new school revenue plan heavy on so-called "sin" taxes, Gov. Rick Perry became the latest in a long line of Texas leaders indulging in a love-hate relationship with their constituents' vices.

On the one hand, they feign disapproval of human weakness with calls for higher taxes on cigarettes and even, in Perry's case, an admissions tax on patrons of adult nightclubs. But if their figures (no pun intended) are going to balance, leaders have to hope that a large number of Texans keep puffing and the tassels keep twirling.

Perry says he is targeting people's "unhealthy behaviors." In truth, however, he actually is promoting unhealthy behavior with another part of his revenue package, which calls for an expansion of state-sanctioned gambling. It would put video lottery terminals, which are similar to slot machines, at racetracks and on Indian reservations, with the state getting a share of the action.

The governor could argue that voters would have the final say on his gambling proposal, because it would require a constitutional amendment.

(A similar argument also could be made about a state income tax, because an income tax couldn't go into effect without voter approval either. And it would raise more money for education than a mountain of sin taxes. But from the viewpoint of Perry and most legislators, it would be far too big an evil.)

Revenue from Texans' "unhealthy behaviors" accounts for a relatively small slice of the state's budget, but it is significant nevertheless. Taxes on tobacco and alcohol and state proceeds from the lottery total about 7 percent of Texas' general revenue.

Perry didn't propose higher alcohol taxes, but beer and liquor lobbyists are ducking for cover anyway. If there is a special session on school finance this spring -- and Perry seems intent on calling one -- some lawmakers inevitably will toss booze into the mix.

Taxes on cigarettes and alcohol have been periodically increased over the years, but the state mostly avoided the gambling business until 1986, when the oil bust forced the Legislature to raise taxes and cut spending during an election-year special session.

[snip]

The only obvious opposition is from the tobacco industry and from smokers. Most Texans don't smoke, and cigarette makers are a politically acceptable target. The proposal also has strong support from health care advocates.

The most provocative (and chuckle-inducing) idea is the governor's proposed $5 admissions tax on customers at adult entertainment clubs. Club owners already are complaining that they are being picked on unfairly. (Get in line, fellas.)

One Austin lobbyist suggested that owners instead should step forward, say they are willing to help raise money for education and, in return, negotiate to get the Legislature's regulatory hands off their backs.

The clubs could even stage "back-to-school" nights -- if such events didn't prove too sinful for the governor.