If You Tax Something, You Get Less of It
"In New York, the average state, federal and local tax on a pack of 20 cigarettes is now $6.02. That includes an 8 percent combined state and local sales tax, as well as a $1.01 federal excise tax, according to the state tax department. New York raised its tax on July 1 to $1.60 a pack to generate $260 million to help offset a $9.2 billion budget gap.
A pack of Marlboros hovered around $6 or $7 a pack at Lucky 7 before the tax hike. Now, a pack costs $9.60. The store’s cheapest, Grand Prix, costs $7.95 a pack and its most expensive, Carlton, checks in at $11.05 a pack. A pack of Senecas manufactured by Indian nations ? $3.50 at the Onondaga Nation Smoke Shop. That’s $2.52 less than the tax alone on the average pack of non-Nation cigarettes. A pack of Marlboros costs $6.50 there.
But President Jim Calvin of the convenience store association, called the tax increase a “policy disaster.” “Law-abiding stores like ours lose enormous amounts of business, state and local governments lose hundreds of millions in tax revenue, and public health loses because the financial incentive to quit is easily and routinely circumvented,” he said."
HT: Chris Gardner
Prediction: The cigarette tax will not generate $260 million in tax revenue.