New York cigarette tax leads to reduced consumption which leads to tax shortfall which leads to dumbfounded officials

by editor on November 17, 2010

When will they learn? The economic geniuses in New York raised cigarette taxes by 58%, which increased the price of pack of smokes in New York city to a remarkable $11.60.

cigarette-tax-new-york

There's only one solution, New York: Lower the legal smoking age

As you might expect, cigarette sales plunged by 27%. As you also might expect, cigarette sales are up by more than 40% in neighboring states and Indian reservations.

The NY Post reports the “duh” details:

Sales of taxed cigarettes have plummeted a staggering 27 percent statewide since the highest cigarette tax in the nation took hold in July, a Post analysis has found…

“That’s what we warned would happen, and obviously it has come to fruition,” said James Calvin, of the New York Association of Convenience Stores.

“Every tax increase drives more smokers to that dark, shadowy, unregulated, unlicensed, untaxed side of the street. The whole policy is self-defeating.”

If the trend continues, the state could fall far short of the $260 million windfall Paterson expected from the 58 percent tax hike.

How do you solve the shortfall? Liberals would tell you the only solution is to raise taxes.

Source: New York Post

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sa_rose
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sa_rose

So on one hand, everyone is told they should stop using tobacco products, because the are a health threat. It right there on the pack. Then some Congressman convinces his cohorts that taxing the living hell out of cigarettes will bring in tons of money. So what’s the message? Smoke to make us rich or don’t smoke because you’ll die. No wonder everyone is so confused.

KimmyQueen
Member

Well I never confuse liberals as the simple minded people that they truly are.

Jim Stewart
Member
Jim Stewart

Why do liberals have such a hard time understanding how raising taxes (or prices) lowers demand?

mojo
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mojo

Taxable Sales, but not necessarily consumption. I’m bettin’ the “bent-nose boys” are taking in mounds of cash. There’s a hell of a mark-up on a semi load of butts.

Elrond Hubbard
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Elrond Hubbard

You can’t abolish the laws of supply and demand. If there’s a demand for cheap, untaxed cigarettes, people will supply them. I lived in NYC when they banned fireworks, within days I could buy any firework I desired from entrepreneurs on Canal Street. It won’t be any different with tobacco.

Johnnybamerica
Member
Johnnybamerica

If you want less of something TAX it. If you want fewer people buying cigarettes TAX it. If you want fewer business hiring fewer people, raise taxes, (payroll taxes), etc. Of course fewer people hired and working means fewer people paying taxes.

Statists use tax policy to punish. Paul Krugman won a Nobel Prize for that kind of crap. In the end everyone suffers. I suppose that’s the result progressives desire.

perlcat
Member

A clarification.

If you want fewer people buying cigarettes TAX it, but stop before you reach the point where buying them illegally becomes attractive.

danybhoy
Member
danybhoy

Gov’t regualtion is usually how black markets are formed. So if you are scoring at home…Over bearing gov’t regulation = Organized Crime.

Liberalism: Ideas so good they need to be mandatory.
Andrew Wilkow

KimmyQueen
Member

This is what liberals do not understand. They do not see that there is a tax in everything and not raising tax on something means that something else will get taxed so there is NEVER a true lowering of taxes as far as liberals politicians are concerned.

The Obumbly Obomster
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The Obumbly Obomster

Any idiot who’s ever taken an Economics 101 class knows that you maximize profits where the demand curve meets the supply the curve. In this case, they have move away from that “sweet spot” by jacking up prices.

OperaNerd1986
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OperaNerd1986

I agree with you. It’s as though the New York government thought that people were so addicted to smoking that they would continue buying cigarettes regardless of the price. Instead, they just gave people another incentive to quit.

YT
Member
YT

RJR and PM should show people pictures of how much their cigs are in USD in other countries. I bought marborlos for about $2.00 per pack and their off-brands for as little as $0.50 in the middle east.