Taxes are imposed, one hopes, to create a source of income for a government. If a source of tax revenue depletes itself, tax laws will need to be re-written to accommodate the loss. If the goals of increased taxes on cigarettes is to generate revenue for a state AND reduce smoking, it will have to do one better than the other (generate revenue) or it will eat its own tail (reduce smoking to 0 persons).
The $1-per-pack increase should generate roughly $700 million a year more in taxes, according to projections by the comptroller's office: $682.6 million in fiscal 2008 and $722.8 million for fiscal 2009.
Source: $1-a-pack hike in cigarette tax a few days away Houston Chronicle
While a grassroots campaign to increase taxes might be a politically commendable activity, one conducted by a statewide coalition of health groups and other organizations that includes the American Cancer Society, American Heart Association, Campaign for Tobacco-Free Kids and American Lung Association of Texas is at best, questionable.
Among the options that are on the table, increasing the cigarette tax is clearly the most preferred solution to the state’s revenue crisis.
Source: Dimitri Pantazopoulos, some BS polling firm
But what were the options on the table? Reducing funding for road and highway construction OR increasing the state sales tax OR increasing gasoline taxes OR creating a statewide property tax OR reducing funding for health care programs OR reducing funding for public education. Or, as their poll of 500 Texans showed, increasing taxes on cigarettes, favored by 70% of over the aforementioned other "options"
With an estimated 3.3 million smokers in Texas (source: James Gray, spokesman for American Cancer Society, Texas chapter), there are taxes to be collected. Even if 4% will quit when cigarette prices increase 10%, you are still left with over 3 million smokers.
Texans don't have the same opportunities as smokers on the east coast, where DC and Maryland smokers regularly head to Virgina for lower-taxed cigarettes. It'd take too long for most Texans to get across state lines to a state with a lower excise tax on cigarettes. Like most black markets, cigarette smuggling supports crime syndicates, including "terrist" groups such as Hezbollah, and reduces controls in place to limit underaged smoking. (source: Cigarette Smuggling. Brief Analysis No. 423. National Center for Policy Analysis).
I was able to find plenty of places to sell me American Spirits, typically from an Indian reservation, for less than what I pay now. In Japan, I was able to find them for just ¥340. There are certainly ways around this tax, for me.
But for those poorer, or less educated, or with less time, there aren't as many options. A pack-a-day smoker now has $365 less each year. A minimum-wage, pack-a-day smoker just gave up two weeks of income.
