Washington Retail Association president Jan Teague has an insightful op-ed in the Everett Herald, pointing out the likely consequences of a 50-cent hike in the state cigarette tax. The tax won’t raise the money proponents expect; it will boost the tax burden of lower-income households; it will encourage smuggling and tax evasion; and, it will have a substantial negative impact on small businesses.
Teague concludes:
Taken together, the impact on small businesses and the effect on lower-income households make the proposed cigarette excise tax increase a bad idea that could weaken the fragile economic recovery and put retail jobs and families at risk.
Many, probably most, Washingtonians want to discourage cigarette smoking. Higher taxes, they think, may do the trick. But the evidence, as we’ve noted before, suggests the strategy has serious shortcomings. Teague’s op-ed should be read in its entirety.
Coincidentally, the Wall Street Journal today carries an op-ed making much the same point.
Of the 32 state tobacco tax increases that went into effect between 2009 and 2013, only three met or exceeded revenue projections, according to industry data.
Caution flags…
