Tuesday, November 30, 2010

Duh: NYS Jacks Up Cigarette Taxes, Legal Sales Fall Precipitously

File this one under the They Never Learn file. It doesn't take a genius to realize if you make cigarettes unaffordable that people are just going to find a way to get them cheaper, wherever that may be. And in New York State you've got the Native Americans selling them much, much cheaper, and you've got border states also in competition with them. So what do we get? Less tax revenue than anticipated, more bootlegging and related crime, and probably coming soon: yet another tax increase.

You can't fix stupid, and since New York is controlled by Democrats, there's no hope they'll ever figure it out.
How pathetically predictable: Albany raises taxes on cigarettes to such onerous levels that purchasing them legally becomes all but unaffordable.

So what happens?

Folks buy them illegally. (Duh.)

As reports in The Post last Friday and Saturday show, that's what's happening: underground sales of 7.3 million packs a month.

Legal sales, by contrast, plunged 27 per cent, from 41 million packs a month to 30 million, between June and July -- when Albany jacked up butt taxes to as much as $5.85 a pack in the city.

That's far more than the 8 percent to 10 percent dip that the state projected.
And it comes with a price: "We see lots of [rip-offs] and violence with drug-trafficking," ATF special agent Ron Turk told The Post. "As volume and money go up, the stakes get higher."

Sure, $14-a-pack smokes may prompt some folks to quit, as tax supporters argue.

But with tax-free cigs so ubiquitous and so much cheaper, why should smokers be expected to resist them? They buy levy-free packs in lower-tax states, on Indian reservations or at local bodegas.

State enforcement agents complain that budget cuts are curtailing their operations, which no doubt they are.

But the answer's not restoring the cuts.

The answer is bringing cigarette taxes into equilibrium with national norms -- thereby removing the chief incentive for buttleggers and Indian reservations to break the law in the first place.

No one has reliably shown that sky-high cig taxes curb tobacco use enough to justify the added crime. Nor are the tax hikes bringing in revenues anywhere close to what was projected, since legal sales have dropped.
You'll never see them lower taxes. The unquenchable thirst for tax revenue--especially in a state that's broke--can never be sated. In the highly unlikely event they do slash cigarette taxes, they'll simply move on to gouge someone else.

Cut spending? Hah! As if.

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