Unlucky Strikes
July 31, 2008 at 8:40 am
Well here’s a fascinating twist of taxation fate. From today’s Washington Post:
Cigarette sales have dropped by nearly 25 percent in Maryland since the state’s tobacco tax doubled in January, as sticker shock apparently has curtailed some residents’ smoking and sent others across the border for better deals.
Maryland lawmakers voted last fall to raise the tax to $2 a pack to help bridge a budget shortfall and expand subsidized health care. Fiscal analysts predicted that the new rate, the sixth highest in the nation, would cause cigarette sales to drop off, following a pattern with past increases.
But the decline during the first six months of the year significantly exceeded their projections, exacerbating Maryland’s budget problems and prompting speculation about what other factors might be at play. The tight economy, for example, has almost certainly added incentive for some to kick the habit.
Still, “it’s unlikely that this is exclusively because of an abrupt cessation of smoking on the part of Marylanders,” said House Majority Leader Kumar P. Barve (D-Montgomery), who suggested that people are probably picking up extra packs of cigarettes when they are in the District, Virginia or Delaware, all of which have lower tax rates.
So in addition to a Surgeon General warning, should cigarette packs now have a warning from the Comptroller: “Excessive taxation is hazardous to your financial health”?






















