Jump to full article: San Francisco (CA) Examiner, 2002-08-20
Author: BOB SHEPHERD / Special to The Examiner
Intro: CALIFORNIA should reject as fools gold the proposed huge increase in cigarette taxes. I spent 25 years in New York state government as a cop, a prosecutor and the top enforcement official for tobacco taxes, and I know first-hand what such a high tax will bring: crime, cheap cigarettes easily available to youth, and unemployment.
Will California's revenues be increased by the tax? It is far from certain because much depends on how much the sale of tobacco products is reduced by the higher tax. . .
But what about the other possible goal of taxation -- to change people's behavior? After a decade or more of punitive social and tax policy against tobacco products, the people who still use the stuff are highly committed to it. If they've held out all this time, they're not likely to quit. . .
Even more unsettling is the fact that a tax increase like this discourages economic growth. California's distributors will lay off workers when business drops off, and retailers who depend heavily on tobacco profits will close and join the ranks of the unemployed. The math is simple. More retail sales means more opportunities, lower sales means fewer jobs, fewer people paying taxes, and less revenue generated for the state.
Perhaps the most egregious problem with a tax increase of this magnitude is that it will end up making cheap cigarettes available to kids-- the direct opposite of what the proponents claim. With an overwhelming proliferation of smuggling, cheap cigarettes will be available over the Net and on many street corners. . .
The lesson is clear from New York to California: when governments try to tax behavior in order to change behavior, they wind up losing revenue and hurting the innocent.
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