Sin Taxes Just Don’t Work


Over at the FreedomWorks blog, Emily Zanotti dives into to one of my favorite issues — cigarette taxes. Smokers in Washington have apparently realized that it’s cheaper for them to purchase their cigarettes from Idaho, Oregon or on the black market rather than pay the $3.02 in-state tax for a pack of smokes.

While Washington’s excessively high cigarette tax has been a boon to its neighbors, Zanotti notes that Oregon is considering an increase to discourage smoking, not realizing that the increased sales are coming from out of state:

Oregon is now also considering a state tax, the thought being that this sudden boom in cigarette sales could line their pockets as well. Of course, Oregon is conveniently ignoring that the cigarette sales boom is actually the result of more expensive cigarettes to the north, and that Idaho to the East would just as quickly turn into a destination vacation for Oregon’s smokers as Oregon did for Washington’s.

As the Mackinac Center notes, smuggling and black market cigarette sales accompany tax hikes almost immediately, and despite any immediate peak in calls to state-run “quit lines,” there are really no long term effects of a tax or ban on people’s cigarette use - in fact, taxes and bans don’t slow smoking at all. They just happen to make smokers more creative about getting a better deal on their products of choice. Oregon hipsters, then, wouldn’t be dissuaded from using their hand-rolled craft cigarettes and their Native Spirits. They’d just find trunks to buy them out of instead of bodegas.

Raising revenue off a cigarette tax hike also isn’t a good idea, particularly when you’re surrounded by states with a lower tax. We can see from other parts of the country — including the District of ColumbiaFloridaMarylandNew Jersey, and New York — when cigarette taxes are increased, sales decrease.

And when cigarette tax revenues fall, politicians are going to look elsewhere to make up for the lost money — either by spending cuts or raising taxes elsewhere or a combination of the two.

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