Lifestyle Taxes Go Up in Smoke
When will politicians learn that raising "sin taxes" brings in less revenue than expected?
November 11, 2011 - 12:00 am
Never ones to accept failure as an option, Cook County implemented an enforcement informant program. (Try saying that three time fast while puffing on a Marlboro and holding a martini in each hand.) They began paying out “rewards” of up to $1,000 for people who would report under the radar cigarette sales to the police and issuing massive new fines to local stores dodging the tax code. This failed to materially affect the tax revenue numbers, but it did manage to soak the taxpayers for tens of thousands in snitch fees while vacuuming $1.6M out of local small to medium businesses in fines.
Other smokers began moving to a “roll your own” plan, purchasing bulk tobacco, paper tubes and rolling machines. But state and local governments, such as in Wisconsin, have caught on to that game and are rapidly jacking up the taxes on those products as well.
In New York — noted for its annual competition with Massachusetts to be the highest taxed state in the nation — the combined list of local, state and federal taxes already have a pack of premium brand smokes going for more than eleven dollars in the Big Apple. Some upstate residents have taken to crossing over the border into Pennsylvania for their purchases, robbing the state of its cut of the pie entirely. But an increasing number are simply giving up on any pretense of living within the bounds of the law and are purchasing black market smokes off the back of the truck from smugglers. One recent report found that the Empire State was losing out on as much as $20M per month in tax revenue from this new age of prohibition era tactics.
None of these stories bode well for Governor O’Malley and his dreams of propping up his state’s floundering finances on the backs of smoker and drinkers. It’s an endless shell game, always seeking that perfect golden goose to fleece, but Maryland is rapidly running out of geese. Perhaps it’s time to take a page from the books of neighboring states and begin steadily driving down costs. A less expensive climate might begin to slow down the exodus of the wealthy and attract businesses to hire Maryland’s unemployed workers.
Who knows? A few of them might wind up making enough money to be able to afford a case of beer and a pack of Kools.