It doesn’t always take an economist to point out the perils of bad 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. policy. In response to the 49-cent per-pack cigarette tax increase included in Connecticut’s proposed 2007-08 budget—about a 33% increase—the New Haven Register interviewed local smokers, who accurately described the problems caused by imposing such high taxes on cigarettes—problems that apply not only to tobacco taxes but to “sin taxes” in general.
On the creation of black markets and increased crime:
“I think cigarette smokers are an easy target,” said Brian Lima of New Haven. “I think anything above $7 a pack is going to force a cigarette black market.”
A store owner who had been robbed for $500 worth of cigarettes, which would presumably be sold on the black market, said:
“Now [the governor is] making cigarette stores more of a target for robberies. … It’s more lucrative for people to steal the cigarettes than to get the money.”
On economic neutrality (broad tax bases and low rates), a basic principle of sound tax policy:
Suggesting that more of the financial load is being borne by a shrinking population of smokers, [store owner] Francis said, “I thought that the tax burden was supposed to be carried by the majority. Now we’re considered a minority. It’s discrimination.”
On the “public health” argument that high taxes will make smokers quit:
How high would the price of smokes have to go before people would conquer their addiction? Several people said $10 would do it for them, but one woman from Wallingford, who wouldn’t give her name, refused to admit that she’d quit at even $15.
“I said I was going to quit when it hit $3,” she said while puffing outside Union Station in New Haven.
Click here for more on cigarette taxes.
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