Jefferson Review

"Your Liberty is Our Interest"

Home /  Archives / Links / Quotes / Book Reviews / Advertise /Contact us / Subscribe / Calendar

More Kentucky freedoms going up in smoke

The Bluegrass Institute

Determining government priorities and making spending decisions based on available revenue is the political equivalent of swimming upstream these days. Most politicians seem to look for the easy way out when dealing with budget shortfalls.

Twenty states raised cigarette taxes in 2002 in hopes of increasing government revenues. Nationally, the average cigarette tax rate increased 64 percent from 1992 to 2000. Yet state tax revenues grew only 35 percent.

Such knee-jerk reactions ignore economic facts. Taxes don't occur in a vacuum. People change their behavior based on prices. If cigarette taxes are increasing across the country, where are the revenues promised by the tax-and-spend lobby?

If the special interests in favor of expanded government were wrong about this, could they also be mistaken in their assertions that higher taxes lead to less smoking? Absolutely.

Higher taxes have little impact on how much people buy and more influence on where they purchase their smokes. Smokers will choose to buy from states with lower prices and shun retailers in high-tax states.

Claims that higher cigarette taxes reduce smoking among young people also are suspect. Instead of reducing youth smoking rates, raising taxes will find smugglers gladly filling up trucks with cigarettes in low-tax states and moving them to sell in high-tax states.

When cigarettes are sold on the street, no one checks IDs. Ask organized crime groups; they've been selling black-market cigarettes for years.

Now that Kentucky's legislature is back in session, higher cigarette taxes are again on the agenda. But lawmakers should pay more attention to the failures of similar policies to produce coveted revenues in other states.

They will find that raising cigarette taxes is yet another sputtering idea that fails to solve the real problem of overspending in Frankfort.

Sources:

“Cigarette taxes – Impact” by Dwight R. Lee, Illinois Municipal Review

“Cigarette Taxes, Black Markets, and Crime: Lessons from New York’s 50-Year Losing Battle" by Patrick Fleenor, CATO, at

“Cigarette Smuggling” by Bruce Bartlett, National Center for Policy Analysis

 The Bluegrass Institute is an independent research and educational institution offering free-market solutions to Kentucky's most pressing problems.

Weather (Louisville) / Mapquest /  White Pages / Business Search / CNN / Dictionary / E-card / MSN