Raising Tobacco Taxes is Dumb

Isn’t it interesting how every time a state government is in fiscal trouble that the first thing they decide to do is to raise taxes on the sale of tobacco? Somehow, legislators have it in their heads that the only people who might be upset by raising the cost of tobacco are smokers. And, since smoking is bad for smokers, and smokers shouldn’t be smoking anyway, maybe making smokes more expensive will dissuade smokers from smoking.

Of course, this is government we’re talking about. So it never works out they way they think it will, no matter who tries to tell them. In fact, this plan to raise revenue from tobacco taxes doesn’t actually work at all.

See, governments don’t understand free markets. If you raise the price of a certain good or service beyond a certain point, people who want the product badly enough will find a way to procure it more cheaply. Remember Prohibition? Same thing. To avoid paying the higher taxes, they will cross state lines, buy from an Indian reservation, buy over the internet, or even resort to black market purchasing.

And, if raising taxes does actually cut down the number of smokers, then the expected revenue from this tax increase will be less than expected…because there will be fewer smokers!

It didn’t work in D.C. in 2001. It didn’t work in New Jersey, and they even tried it twice! The list goes on and on. If a demand for a product exists, a supply will be sought out, and at the best possible price.

The truth is that the number of smokers in the U.S. is affected more by tobacco marketing than anything having to do with public policy. And in an example of colossal governmental stupidity, that grand settlement fund from a few years ago -you know, the one where the tobacco companies all had to pay a bunch of money to anti-tobacco education programs – it’s actually had the opposite effect that was intended.

In Martin Lindstrom’s book Buyology, the author describes a series of neuroimaging experiments involving anti-tobacco messages and how the brain perceives them. It turns out that when viewing any kind of anti-tobacco ad – even photos of diseased lungs – that these messages actually stimulated the part of the brain responsible for cigarette cravings. That’s right, I said these anti-smoking messages stimulated cravings. Didn’t anybody in the government think to research this? Of course not.

Instead of trying to get the average citizen to kick their smoking habit by raising tobacco taxes, maybe government should kick its spending habit and impose some serious fiscal discipline. It’ll be better for everyone’s health.