State lawmakers in Maryland are considering whether to raise cigarette taxes from $2.00 per pack to $3.00 per pack. Other proposed tax increases include hiking the excise tax on other tobacco products from 30 percent of their wholesale price, to nearly 80 percent.
The proposed excise tax hikes are intended to fund returning the state’s Department of Health and Mental Hygiene’s budget to pre-2015 levels, undoing the effects of Gov. Larry Hogan’s January across-the-board budget cuts on the agency.
Failure to Achieve Goals
Tom Firey, a policy analyst at the Maryland Institute for Public Policy, says sin taxes often fail to achieve their stated goals.
“We often see that the revenue increase is not nearly as large as is expected, for a number of reasons: some people reduce consumption—whether quitting, cutting back, or switching to other forms of nicotine consumption—while others find ways around their state’s tax,” he said.”
Firey says using tax policy to mold people’s behavior is not a proper role of government.
“Government should not manipulate people’s personal decisions. There is some public cost to smoking, but that cost would be fully recouped by much lower cigarette taxes than what we have now.”
‘Very Well-Intentioned People’
“Very well-intentioned people believe that higher taxes will lead people to quit, but the numbers that will quit may be relatively small, especially in high-tax states,” said Michael LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center. “Why? Those still smoking probably have a very strong desire to smoke.”
LaFaive agrees additional excise taxes are unlikely to meet expected revenue goals.
“Maryland is heavily populated and touches Virginia, a state with a much lower tax rate. It would be naive to think that cigarettes weren’t being brought up into Maryland that were purchased in Virginia,” he said. “Tax evasion and avoidance is remarkably common on the East Coast.”
Disliking Others’ Happiness
Firey says people should be allowed to engage in peaceful activities they find enjoyable, such as using tobacco, without the government’s approval.
“Cigarette taxes, at the level of Maryland’s, are simply an effort by state politicians and special interests to impose their personal values on other Marylanders.
“To borrow from Marylander H. L. Mencken, Annapolis suffers ‘the haunting fear that someone, somewhere may be happy,'” he said.
Rudy Takala ([email protected]) writes from Washington, DC.
“Cigarette Taxation and the Social Consequences of Smoking,” W. Kip Viscusi, https://heartland.org/policy-documents/cigarette-taxation-and-social-consequences-smoking/