Earlier this month, Otis Rolley, a mayoral candidate vying for a spot in the upcoming 2011 Baltimore elections, proposed an unusual anti-crime measure. Rolley’s plan would “impose a $1 per bullet taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. on all bullet purchases in the city.” This would be in addition to an 11% federal excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. that already applies to all ammunition sales. At a recent press conference, Rolley defined the intent of the tax when he said, “This is not a revenue enhancement tool. It’s a make-it-difficult-for-you-to-buy-bullets-in-the-city tool.” Although Rolley’s intentions are likely sincere, there are reasons to be skeptical of the effectiveness of such a policy.
Isn’t it probable that determined criminals place a high value on bullets? Criminals who rely heavily upon ammunition may not be very sensitive to price changes. If most criminal decisions are made on a larger margin, the bullet excise tax is unlikely to significantly deter criminal behavior.
Even if the tax drastically reduces ammunition purchases within the city, it does not apply to bullet purchases outside of the city limits. Rather than reduce crime in Baltimore then, wouldn’t the tax simply change the location where many bullets are purchased? Criminals may simply shift their purchases of bullets into lower tax municipalities, or buy them on the black market, thereby undermining the intent of the tax.
Finally, the proposed excise tax would place a disproportionate burden upon law-abiding citizens. Rather than punishing only those who commit gun related crimes, the bullet tax will affect all consumers of bullets, both law-abiding citizens and criminals. Law-abiding citizens who use bullets for legal activities such as hunting, target shooting, or self-defense will be harmed by the tax. Although it is likely that the value placed upon bullets for self-defense is relatively high, the tax will potentially eliminate many of the more price-sensitive activities. Therefore, frequent target shooters and hunters may be much more likely to change their behavior because of this tax than violent offenders. If the purpose of Rolley’s proposed excise tax is to discourage criminal behavior, then criminals should bear the costs of their actions, not lawful citizens.
Rolley’s proposal highlights a more fundamental pitfall often encountered with excise taxation. In many cases, excise taxes are an instinctive, but poorly conceived, reaction to a legitimate problem. Unfortunately, sound tax policy is not often achieved through a simple reflex. Policymakers often overestimate the effects of excise taxes and hastily implement them without considering the unintended consequences. Policy makers and administrators should thoughtfully consider these issues before rushing to implement a tax. Until this is done, we will likely see many policy proposals like the bullet excise tax.
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