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Saturday, March 29, 2014

Sin tax: yes or no?

Photo credit: dyanvega.blogspot.com

The proposed “sin tax” that will be on the Cuyahoga County ballot in May drew pro and con comments from readers and voters on Cleveland.com. Andrew Tobias's full analysis is here. Here is an extract:
If voters approve it in May, the county's sin tax would be used to pay for maintenance for Cleveland's pro sports stadiums. It's assessed at 4.5 cents per pack of cigarettes, 1.5 cents per 12-ounce bottle of beer, 6 cents per 750-milliliter bottle of wine, 32 cents per gallon of mixed beverages, 24 cents per gallon of cider and $3 per gallon of hard liquor. Officials estimate it will raise around $270 million over a 20 year period, based on recent collections.
Will the price of my beer really go down if the sin tax fails?
moneymike posted:
“So all of you geniuses who want to vote NO really think the price you pay for beer or cigarettes is actually going to drop now that we do not have a sin tax? Its the same story with gasoline, why will we never see gas less than $3.00 again? Because everyone is still paying the price now. So instead without the sin tax we will pay the same price for beer and cigarettes but instead of that money going back into the county to generate more revenue, it is going into the pockets of your local convenient store owner... Makes sense lets vote NO and deprive CLE of everything.”
I hear this a lot. If the sin tax fails, should we expect a $5 brew at Market Garden to cost $4.98? Will a $5.50 pack of cigarettes suddenly cost $5.45?
This isn't scientific, but the consensus from those that I've talked to: not very likely. 
(UPDATED: March 29) I thought about this overnight, and decided I didn't address this issue well enough. It's a bit of an open-ended question, and if I get a better answer, I'll update it here. But a commenter on this post who identified him or herself as a tobacco representative says convenience stores likely would lower the prices of cigarettes if the taxes fails. I have not heard the same thing from bar owners or people in the liquor business. 
It's also worth saying the anti-sin tax people say regardless of what happens with the prices, the tax itself hits the poor the hardest. And, the money it raises isn't inconsequential, and could be used for something else. Finally, I should point out: many of the commenters here oppose the tax on principle.
Why can’t Cleveland just raise taxes on tickets?
In a post on Thursday, Gadgetking2014 wrote:
“Instead of a general sin tax they could use a per-ticket facility fee to raise the necessary funds. let the people who actually use the facilities pay for them.”
The Northeast Ohio Media Group’s Rich Exner addressed this issue, and set up a nifty calculatorto provide some rough estimates of how high the tax would have be to equal the sin tax. His answer: ranging between $3 to $7, depending on the team.
The pro-sin tax campaign argues that tickets are already taxed enough. The admissions tax in Cleveland is currently 8 percent -- a tax hike would discourage fan attendance and make Quicken Loans Arena in particular less competitive when attracting regional concerts and other events, they say.
Who decides what constitutes “maintenance” versus “enhancements” to the stadiums?
Again from Gadgetking2014:
“also they need to better define what is contractually obligated maintenance and what is enhancements (that the teams are responsible for). the tax does not expire for over a year so they have time to work this out before they lose this temporary tax.”
Here’s what we know about what the teams want:
The Cavs and Indians have submitted what amount to “wish lists” – that is, about $135 million in estimated stadium repairs the two teams expect to ask Gateway to pay for within the next decade. 
It’s up to the Gateway Economic Development Corp. – that’s the non-profit landlord created by Cuyahoga County and Cleveland to oversee Progressive Field and Quicken Loans Arena – to approve any requests for capital improvements greater than $500,000. Gateway will not approve anything it deems to be enhancements not covered by the lease. This determination is legal and complicated, and Gateway board members say they take their responsibility seriously.
But this review won't happen until the teams officially ask for the repairs. That likely won't happen until July 1, if not later.
As for the Browns -- team officials said they expect to ask for $23.7 million in repairs over the next 10 years. Their list is less detailed, in part because FirstEnergy Stadium is owned by Cleveland and is not entirely dependent on the sin tax.
The Northeast Ohio Media Group’s Leila Atassi dissected the Browns’ lease in November. In short, the city can be held responsible even for “upgrades” under the correct circumstances.
“Tax and spend Democrats”
“The dems never met a tax they didn't like.”
We hear this a lot.
The majority of elected officials in Cuyahoga County who have taken a public position on the sin tax support it. And of course, the majority of elected officials in Cuyahoga County are Democrats.
But some Republicans have lent their support to the issue. For example, County Councilman Jack Schron, the presumptive Republican candidate for Cuyahoga County executive, was among the three Republican members of county council that unanimously voted to place the sin tax extension on the ballot last January.

Read the rest here

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