Michigan goes after poor people for Cigarette Taxes

The Detriot News reports:

When Marilyn Mostek, a senior living in a subsidized apartment, heard she could save $20 on a carton of cigarettes by ordering from an out-of-state Indian reservation, she thought she had found a clever way to save money.

Those savings went up in smoke on May 19 when she received a bill from the state of Michigan for $511 in unpaid cigarette taxes -- nearly half of her fixed monthly income. Her neighbor, Robert Stutsman, received a bill the same day for $744.

Mostek, 69, and Stutsman, 75, are among 11,000 Michigan residents who over the past year and a half have felt the pinch of a state crackdown on people who have avoided Michigan's cigarette tax by buying from out-of-state vendors online.

The bills, averaging $1,787, have hit the elderly and poor particularly hard.

To pay the debt, some have taken the state's payment plan option. Others have used credit cards or taken out bank loans. A number of people are just refusing to pay, hoping the problem will go away.

Higher rates of smoking among the poor only increase the likelihood that the tax is hurting them more than others. A 2004 state survey showed 35.7 percent of those making $20,000 a year are smokers, versus 14.3 percent of those earning more than $75,000.

Attached to Mostek's and Stutsman's bills were letters that told them to pay up by June 19 or face a 500 percent penalty.

"Now I'm going to have to borrow from the bank; I have no other way of paying it," Mostek said. Stutsman said he will get the money by postponing the purchase of an air conditioner for his one-bedroom apartment.

Within the past few weeks, 3,500 new bills have been mailed. The state's take since launching the effort in February 2005: nearly $8 million.

State officials aren't giving anyone a break. Even those on the installment plan must pay interest (the prime rate plus 1 percentage point).

It appears that Michigan is addicted to tax revenue from cigarettes.Maybe Michigan should seek counciling for their problem.