Friday, September 07, 2007
Higher taxes = less revenue
This morning's Wall Street Journal has bad news for politicians who want to increase the size and scope of the welfare state with higher cigarette taxes. Let's hope Governor Bredesen and the tax-and-spenders in the General Assembly are paying attention (subscription required to read the entire editorial):
"Cigarettes have become ever pol's favorite tax target, and last year [New Jersey] raised its cigarette tax to $2.575 per pack - the highest state levy in the nation. Governor Jon Corzine forecast that the tax increase of 17.5 cents a pack would fetch $30 million in revenue to help balance the state's $1 billion deficit. Not quite. A new analysis by the Center for Policy Research of New Jersey finds that the state collected $23 million less revenue from tobacco taxes in Fiscal 2007 than it did the year before. ...
"Something similar is going on all over the U.S., where cigarette taxes have on average tripled in the last decade, but treasuries aren't getting the revenue boost. For consumers, tax-free online cigarettes are only a mouse click away, and these purchases now cost the states more than $1 billion a year in lost tobacco taxes, according to the Campaign for Tobacco-Free Kids. Washington state, which levies a tax of $2.03 a pack, loses an estimated $200 million a year to out-of-state purchases, according to the Seattle Times. Californians smoke 300 million untaxed packs of cigarettes a year thanks to the Internet, smuggling and out of state sales. ...
"Patrick Fleenor of the Tax Foundation says states that tax cigarettes at more than $2 a pack "are getting close to that tipping point" where they may start to lose money from further tax increases. This is a special problem for those states - such as California, Maryland and Wisconsin - planning to raise cigarette taxes to pay for expanded government health-care coverage. The new spending commitments will be permanent and rapidly expand, while the revenues from tobacco taxes will decline.
"State cigarette tax collections may fall by an estimated $1 billion more if Congress goes ahead with its plan to raise the federal cigarette tax to $1 a pack from 39 cents in the name of funding an expansion in health-care spending. ... The Heritage Foundation calculates that, to make those numbers add up, some 22 million Americans would have to start smoking over the next decade.
"So, light up, friends. You may kill yourself, but your bad habits will let the politicians continue theirs."
"Cigarettes have become ever pol's favorite tax target, and last year [New Jersey] raised its cigarette tax to $2.575 per pack - the highest state levy in the nation. Governor Jon Corzine forecast that the tax increase of 17.5 cents a pack would fetch $30 million in revenue to help balance the state's $1 billion deficit. Not quite. A new analysis by the Center for Policy Research of New Jersey finds that the state collected $23 million less revenue from tobacco taxes in Fiscal 2007 than it did the year before. ...
"Something similar is going on all over the U.S., where cigarette taxes have on average tripled in the last decade, but treasuries aren't getting the revenue boost. For consumers, tax-free online cigarettes are only a mouse click away, and these purchases now cost the states more than $1 billion a year in lost tobacco taxes, according to the Campaign for Tobacco-Free Kids. Washington state, which levies a tax of $2.03 a pack, loses an estimated $200 million a year to out-of-state purchases, according to the Seattle Times. Californians smoke 300 million untaxed packs of cigarettes a year thanks to the Internet, smuggling and out of state sales. ...
"Patrick Fleenor of the Tax Foundation says states that tax cigarettes at more than $2 a pack "are getting close to that tipping point" where they may start to lose money from further tax increases. This is a special problem for those states - such as California, Maryland and Wisconsin - planning to raise cigarette taxes to pay for expanded government health-care coverage. The new spending commitments will be permanent and rapidly expand, while the revenues from tobacco taxes will decline.
"State cigarette tax collections may fall by an estimated $1 billion more if Congress goes ahead with its plan to raise the federal cigarette tax to $1 a pack from 39 cents in the name of funding an expansion in health-care spending. ... The Heritage Foundation calculates that, to make those numbers add up, some 22 million Americans would have to start smoking over the next decade.
"So, light up, friends. You may kill yourself, but your bad habits will let the politicians continue theirs."
# posted by Joltin' Django @ Friday, September 07, 2007 
