Sin tax for schools? Cabinet Report

Tom Chorneau of Cabinet Report, an education journal, has a thoughtful article hitting the main issues here.  Excerpts:

(Colo.) In a development that might have seemed unthinkable only a few years ago, cash-strapped school officials nationwide can rightly anticipate the next big windfall in state and local tax revenue – legalized marijuana.

. . .

“One approach is for schools to jump in and say, ‘Yes, let’s tax it and get the revenues,” explained Pat Oglesby, an attorney and former Congressional tax staffer, who has written extensively on the issue of marijuana and taxation.

“Another approach is to say, ‘Let’s tax it and deter or discourage use,’” he said. “What that means is that you would be establishing a drug policy aimed at making the after-tax high enough to keep it from being ridiculously available,” he said.  “Either way, taxes are attractive.”

. . .

The education community has also had its own experience with sin taxes with the adoption of state lotteries in much of the nation that provide a big portion of their sales profits to benefit schools.

Oglesby, who is also founder of the Center for New Revenue, a nonprofit based in Chapel Hill that includes marijuana and taxes as a key area of interest, suggests public policy officials consider a variety of economic do’s and don’ts.

For one, he says, states should impose the targeted vice tax at the beginning of the process – just as alcohol and tobacco is taxed. The main reason, he says, is to prevent tax losses due to shoplifting or hijacking.

He also argues that Colorado and Washington are applying much of their tax on the price of the marijuana being sold instead of the weight. He warned that some entrepreneurs are already offering deals that bundle one service – say an expensive hotel room with “free” marijuana.

Finally, Oglesby raises concerns about tax policy being written into a state constitution by voter initiative. He warns that marijuana, as a commodity, will have price fluctuations that may require adjustment of tax rates.

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The article is also at https://www.cabinetreport.com/politics-education/legalized-marijuana-offers-new-sin-tax-for-schools.  It’s nice to have a professional journalist convey ideas accurately.

 

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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