But the Inky also had a front page story about cigarette taxes -- how New Jersey raised them and got less money -- it's the "paradox" that an increase in the tax on cigarettes often (make that "almost always") results in a decrease in revenue from the tax. Amazing, ain't it? These anti-smoking groups have been saying for years that if you raise taxes on cigs, people won't smoke as much; have those chickens come home to roost (and crapped all over New Jersey's budget crisis), ruining the happy, cautious dance of hypocritical 'sin tax' balanced against cynical greed?
Truth is, this is how it usually happens, and it happens for more reasons than people quitting. A quote from the story:
"When you're in a high-tax state, smokers, like anybody else, are price-sensitive, so they're going to go looking for cigarettes where they're cheaper," said Gregg Edwards, president of the Center for Policy Research of New Jersey. "There is a small number of folks who just wouldn't absorb the price increase and just decided to quit, but most of those folks just go to other places."Which neatly sums up why excessively high taxes like these are, essentially, a government stimulus plan for smugglers. When anti-whatever groups publish their neat little "taxes up, sale of [insert targetted "Bad Thing" here] down, yay!" policy studies and reports, they never mention that the most likely outcome is that the people are just buying the "bad thing" somewhere else. People cross the border to buy their cigarettes, or organized crime outfits bring truckloads of them from low-tax states like South Carolina. Are the benefits worth the crime, or the normalization of crime?
Michael LaFaive of the Mackinac Center for Public Policy recently studied the impact of cigarette taxes in Michigan, California and New Jersey... LaFaive's study estimated that 40 percent of cigarettes smoked in New Jersey come from out-of-state or illegal lines of distribution. The figure was based on smoking rates, the number of adults in the state, and the number of legal sales per adult.Bump the tax up enough, and you'll get hijacking and theft, too. We had a case near here a couple years ago where someone smashed a pickup truck through the glass front of a store at night, grabbed armloads of cigarette cartons, tossed them in the back of the truck, and drove off with thousands of dollars worth of cigarettes (and taxes). Great idea, those higher taxes.
Okay, pay-off time. You probably know -- and if you don't, you do now -- that I don't smoke. So cigarette tax increases are not a personal issue. But folks: replace "cigarette" with "beer" or "booze" and "smoke" with "drink," and you've got the same issue, same problem. Beer tax increases usually don't raise revenue. Revenue stays the same, or drops, and less beer is sold, which means less money is made by brewers, importers, wholesalers, and retailers, which means less revenue from that part of the chain, and jobs are usually lost, which means less tax revenue and more benefit payments. It's a brilliant cycle.
What's the solution? End excise taxes. Stop taxing targetted industries. If you don't think people should smoke, make it illegal (and good luck to you if it's just one state at a time). Don't try to balance the do-gooder "raise taxes so people stop smoking" with the darkly cynical "raise taxes and hope they don't stop smoking so much that we lose revenue." Do away with all these ridiculous taxes and fees and charges and nickel-dime bullshit. Tax income and property, things everyone has to pay (you can be progressive about it, I'm not touting a flat tax) and no one can avoid by smuggling their home into another state.
You'll have a more honest government, a government that isn't meddling in people's lives with tax policy voodoo. You won't be subsidizing crime: hijacking, theft, smuggling. And you won't look stupid when the inevitable happens.