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Reason Foundation

Cigarette Taxes Jump the Shark

Michael Flynn
March 5, 2009, 5:01pm

We all know that smoking is a tough habit to break. A worse, addiction, it seems, is lawmakers' dependence on cigarette tax increases when they need to raise some quick revenue. As I noted in this recent commentary, lawmakers in at least a dozen states are looking to a regressive tobacco tax increase to fix what ails their budgets.

Which makes this story kind of...funny. Not only do cigarette tax increases bring in less of an increase than in years past, increasingly they bring in less revenue than before the hike. From the story:

But after the last increase, which at the time gave New Jersey the highest cigarette tax in the nation, collections fell from $788.6 million to $770.5 million. Estimated revenues for fiscal year 2008 are $775 million, below the peak of fiscal year 2005.

Cigarette taxes: the tax hike that acts like a tax cut. If lawmakers are looking for extra revenue, perhaps it is time to cut the cigarette tax.

The original "jump the shark" moment here.


Michael Flynn is Director of Government Affairs


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