Paging Ron Stephens

You may want to do some research before you go ranting about how your $1 cigarette tax hike would have bailed our state out of a budget deficit:

Politicians in Annapolis are scratching their heads wondering what happened to all those chain smokers who were supposed to help balance Maryland’s budget. Last year the legislature doubled the cigarette tax to $2 a pack to pay for expanded health-care coverage. Eight months later, cigarette sales have plunged 25% and the state is in fiscal distress again.

A few pols are pretending to be happy that 30 million fewer cigarette packs have been bought in the state so far this year. As House Majority Leader Kumar Barve put it, fewer people smoking is “a good thing.” Yes, except that Maryland may be losing retail sales more than smokers. Residents of Maryland’s Washington suburbs can shop in nearby Virginia, where the tax is only 30 cents a pack, and save at least $15 per carton.

The Maryland pols are so afraid this is true that they’ve made it a crime for residents to carry two packs of cigarettes that weren’t purchased in the state. In other words, the state says it’s legal to smoke, so long as you use cigarettes that the government can tax and thus become a financial partner in your bad habit. But if you dare to buy smokes across state lines, you can be fined.

Maryland is only the latest state to prove the folly of trying to finance government with a tax on a shrinking pool of smokers. In New York City and State, tobacco taxes have been raised so many times that the retail cost can exceed $9 a pack — about double the national average. Few budget-savvy smokers in the Big Apple pay that tax. Patrick Fleenor, an expert on tobacco taxes at the Tax Foundation, estimates that there is “now a 75% gap between cigarette sales in the city and cigarette consumption.” In other words, three out of four cigarettes are bought elsewhere or are contraband. Out-of-state purchases, tax-free Internet sales and a cigarette black market are booming.

In New Jersey, about 40% of the Marlboros and Virginia Slims that are lit up escape the $2.57-a-pack tax. In Washington State, evasion was so rampant that the legislature decided in 2005 to lower the 75% tax on cigars and other tobacco products as a way to raise revenue and help state retailers.

Cigarette taxes also disproportionately hurt the poor, who will still smoke regardless of the tax tacked onto the price.

Just something to think about.

10 comments

  1. Chris says:

    About time, a Tax that shafts the poor. I’m so sick of taxes that shaft hard working people who contribute to the economy.

    We should tax stupid people who want to kill themselves instead.

  2. John Konop says:

    Why should I get upset about poor people who decided to smoke and pay high taxes? I will end up paying for the extra healthcare anyways from smoking via the poor person having no heath insurance?

  3. Tea Party says:

    Konop your sensitivity is underwhelming. Let’s examine the so-called ‘poor smokers’, shall we?

    Chances are they will have easy access to illegal, untaxed, blackmarket cigs. If you smoked, I don’t envision you ‘copping’ black market cigs.

    The idea of taxing smokers, or any other ‘sin tax’ will run its’ course like the dodo bird, these taxes don’t work, people circumvent tham.

    John, you lost me with your remarks, people who are smokers usually hate themselves for their habit. I cannot understand it–I don’t smoke- but it is tougher to quit than ‘smack’.

    This tax is lame. I challenge our Leadership to innovate: Stop spending.

  4. Dave Bearse says:

    Evasion of taxes, contraband…. it’s a preview of what a 40+% fair tax (including state sales taxes) will do to the economy.

  5. Chris says:

    Hey, Don’t the Russians have a 13% Flat Tax? Maybe we should allow them to take over the state government.

  6. Tea Party says:

    Fair Tax is NOT the answer.
    Fair Tax sounds inviting, simple, intuitive, etc. but the Fair Tax runs against governments prime mandate: G R O W T H.

    A flat tax is not going to work given government (any government) propensity to GROW.

    Georgia needs to really prioritize its’ costs quickly and make intelligent choices on how and where to cut spending. This can be done, we all know it. And without cutting every program that is useful.

    GA cut the program to help troubled kids get back on track – Boot Camp, I think it was called. Local Judges cannot believe it, I guess it worked. In time, that will create a larger cost with grown criminals. Not too smart, if these facts are all correct.

    Mr. Konop congrats on quitting smoking, it takes strong mettle to do so. Regardless, super-taxing smokers will lead to Mr. Bearse’s predicted outcome.

    Mr. Farris, don’t even joke….

  7. gatormathis says:

    Which brings me to another question amongst this predicament.

    Maybe I missed it, but I never really remember seeing much discussion about the legal compensations awarded the attorneys participating in the various “tobacco” settlements.

    Last mention of it I saw was related to some guy out near Missippi that was receiving , like, 2 million a year from his part in such settlement, and bribing a judge with sums of money. He musta had too much money, because most folks don’t have enough left over to do bribing with.

    This also makes me wonder how much money was doled out upon reaching verdict in the suits, and then how much residule was to be dristubuted later.

    If this “redsidule” was based on projections that arent following suit, then I wonder if compensation is based on revenue, or a projected revenue, the difference which could be a hoisty tidy sum I do beleive.

    Maybe someone has a link to a website that delves in such matters.

    I might be wondering how much total money the ole “judge-briber” got fromthe settlement.

Comments are closed.