Sunday, January 11, 2009

Utah paper: Huntsman smoking something

The Daily Herald doesn't like Utah Gov. Jon Huntsman's proposed cigarette tax hike (from 70 cents/pack to $3.00):

We wonder why Utah should stop there. Why not raise it by $100 a pack? That would reduce tobacco use, wouldn't it?

Perhaps. But then again, it could spawn the creation of a major black market, as happened with alcohol during Prohibition.....When the cost of cigarettes goes too high, unscrupulous people will truck in contraband smokes from other states. By avoiding the $3 tax, smugglers will be able to make a good profit margin on illicit cigarettes and cigars, even as they create an additional burden for law enforcement, whose ranks don't appear to be growing while there's a recession on.

Of course, the tax hike is meant to raise money -- $120-$150 million, according to the Governor. But the Herald thinks that's smoke and mirrors.

If tobacco use is curtailed, then estimated revenues must be adjusted downward. And at a time when everyone's pinching pennies, a sharp price increase will likely let the air out of the tobacco revenue balloon.

As the Herald notes, kind of like oil.

In fairness, the proposed tax swap (higher tax on cigs; no sales tax on food) is probably a good idea, even if raising revenue is its sole purpose. Not to be cynical, but as much as politicians say we're addicted to oil, it's much easier to cut back on taking Sunday afternoon drives than it is nicotine. Addicts aren't going to be taxed out of their addiction. It would be nice if a heroin tax were all it took to save the lads from Trainspotting. But from my sources, that's not how heroin consumption works.