Too Late, Md. Smokers — Smugglers, You’re Up!

By January 4, 2008Taxation

The Tax Foundation’s Policy Blog ended 2007 with a review of the state and tax increases going into effect on January 1, including a good summary of Maryland’s largest tax increase in state history, which included a doubling of the cigarette tax to $2 a pack.

The authors note Virginia’s comparatively low tax and say history tells us what happens next when adjoining jurisdictions have such disparate rates:

[Two] cartons, with 20 packs and 400 cigarettes, would sell for $127 in Maryland but only $77 in Virginia. Our previous report on illegal cigarette smuggling showed it was on the rise because of high cigarette taxes, and in this case, such an illegal transaction could net the smuggler a lucrative $50, or 65 percent profit. Plus there’s online smuggling too.

The Examiner article also quotes a citizens health group that advocated the initiative as a way to “help deter as many as 50,000 children from becoming smokers.” But why stop there-banning cigarettes would stop even more children from becoming smokers. The group also is happy that the money raised will go for general health care programs, but again, why hit smokers with a suspiciously round dollar increase to fund general state spending?

Of course, the real reason for the cigarette tax hike is that smokers are a politically unfavored minority that can loaded with higher taxes to fund unrelated government spending programs for the majority. So too with taxing alcohol to fund public transit, taxing bottled water to fund general spending, and taxing video games to fund juvenile detention facilities. And that’s just in the last week.

Better increase the tax enforcement authorites to prevent smuggling, Maryland. On the Metro, too. Start with the Yellow Line and move on from them.

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