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Blog

    Cigarette Black Market Growing

    07/22/2009

    FreedomWorks has organized against dozens of cigarette taxes in the past year.

    FreedomWorks has organized against dozens of cigarette taxes in the past year. Smokers are the go-to group to tax by cash-strapped states looking for a quick fix to gaping budget gaps and a clear warning sign of more taxes to come.  Almost every time we rail against the underhanded manuveurs of state officials to foist the problems of a state onto a small, much-maligned minority of the population we remind folks that higher taxes will not lead to more revenue - but to tax avoidance via the black market.

    Thanks to  Reason for picking up this WSJ piece on the growing black market caused by sky-rocketing tax hikes and examing the ultimate cost states with high taxes end up bearing.

    What we have here is a classic lose-lose situation. Levying high taxes on a popular commodity like cigarettes creates not only a black market, it also turns otherwise innocent people—who are just trying to circumvent an oppressive and confusing tax system—into criminals. Furthermore, cracking down on these criminals involves a whole slew of other resources (courts, police, etc.) that drain government funds.

    Increasing taxes on cigarettes has become a popular option for states in the struggling economy, but doing so won't be the answer to budget woes. Indeed, with smokers in some states apparently valuing cigarettes more than cocaine, I'm guessing the smugglers aren't going anywhere—except maybe jail, that is.

    (But not for long.)