Friday, August 10, 2007

Tax Those Smokes, Save State Money

Speaking of taxes (see previous post), USA Today published a page one story noting that higher cigarette taxes lead to fewer smokers.

The paper notes that cigarette sales dropped 18 percent in North Carolina last year after the tax was raised from 5 to 35 cents. The decline in sales was even higher—over 30 percent—in Connecticut and New Jersey after those states bumped up their cigarette taxes.

In Oklahoma, where smoking rates are relatively high, the state legislature ought to give this idea a look. Fewer smokers in the Sooner state will lead to fewer health problems.

Maybe we can use the money we save to fix a few unsafe bridges.


6 comments:

Dan Paden said...

Leaving aside the merits of smoking or the lack thereof, you've provided a beautiful illustration of a fundamental economic principle: the incidence of whatever you tax declines, or at least doesn't grow as fast as it otherwise would (or you drive it underground). Tax cigarettes and you sell fewer cigarettes. Tax whiskey, and you sell fewer bottles (or increase the number of bootleggers). Tax gasoline and people drive less. Increase a city's or a county's sales tax and...hey, wait a minute! Has someone told the county commissioners about this?

Tex said...

Smoke, smoke, smoke that cigarette.
Puff, puff, puff and if you smoke yourself to death,
Tell St. Peter at the Golden Gate
That you hates to make him wait,
But you just gotta have another cigarette.

Jeff Shaw said...

Dan,
Are you suggesting that we can tax our way into oblivion?

If we really want to get rid of smokers, we should make the tax $40 - $50 dollars a pack; otherwise its just a government scheme to collect an increasing amount of revenue from poor people to fuel re-election campaign issues. Just sayin'.

I'd vote for a $40 a pack cigarrette tax in a heartbeat, and with a good consience. That would effectively stop smoking.

Tulsan said...

As Dan said, $40 per pack cigs would certainly create a huge black market.

Jeff Shaw said...

Every solution creates another problem.

Ryan said...

When NYC boosted their tax by around $5, instantly, semi-trucks of cigaretts started getting high jacked and the black market boomed.

Maybe, instead of taxing people, there would be a way to institute positive change.

Do smoke shops have to pay state tax? If not, people will just buy their cigarettes from the smoke shop instead of QT.