Saturday, July 09, 2005

Cigarette taxes revisited

The Tax Foundation goes into great detail about why cigarette taxes just aren't a good idea. The Tax Foundation reports that the last ten years provide ample evidence of how cigarette taxes work (or not). Looks like it might be time to add the Tax Foundation to the list of willful obstructionists responsible for Louisiana's failure to increase teacher pay during the recent legislative session. The Foundation argues the last ten years demonstrate "to any dispassionate observer that the greater mobility of people and goods, along with instant communication, have made excise taxes obsolete. This is especially true of the cigarette tax because the product is lightweight, compact and highly taxed." Among the problems states have discovered: --"Revenue estimates are rarely met, causing budget problems." --"Bonds sold against future master settlement revenues are unattractive except at preposterously high interest rates, and even then they are downgraded by the rating agencies." --"In a replay of Prohibition-era social decay, law-abiding citizens learn to break the law routinely, and states respond by adopting intrusive and sometimes abusive tactics to catch them." --"Organized criminals and terrorist cells begin trafficking in smuggled cigarettes, and the states spend prodigiously to catch them, with almost no success." --"Businesses and jobs, along with their tax revenue on income, sales and property, are lost to interstate competition." Should increasing cigarette taxes ever resurface as a proposed source of revenue for Louisiana, the anti-children, anti-education supporters of Big Tobacco now have more ammunition.