To take up smoking, or not to take up smoking? Either way, the proposed $.50 per pack addition to the cigarette tax (Raleigh News & Observer archive)in North Carolina probably won’t make much difference to the adults and teens considering starting, or resuming, the habit.
True, many smokers are addicted to the chemical compounds in tobacco, and crave the nicotine as well as the taste. But it’s unlikely that habit or addiction alone drives sales. People also enjoy smoking, and will pay a higher price—within limits—for the pleasure of indulgence. The state’s argument that an increase in the cigarette tax is necessary to discourage teenage smoking, and its harmful long-term health effects, is disingenuous.
The reason that the proposed tax hike won’t cut smoking much is partly habit, but it’s also economics. Cigarettes just don’t absorb enough of consumers total spending, even at the proposed higher prices, to have much of a discouraging effect. If the state really wanted to curb consumption of the product and stop consumers cold, it would impose a tax closer to $50.00 per pack. The fact that we will never see a tax high enough to seriously discourage smoking reveals the true purpose of recreation-related taxes like the proposed cigarette tax—to raise revenues.
Consider: A phenomenally high excise tax—something well over $.50, but less than $50.00 per pack would do it—would be so effective in curtailing consumer demand that tobacco tax revenues would plummet. A dramatic drop in sales with a much higher price would be due to elasticity, or responsiveness, in consumer demand. In a perverse way, however, the state needs and relies on smokers to continue smoking. It even relies on teenagers to start smoking, if it expects the tobacco tax revenue streams to continue to flow.
The rhetoric about discouraging teen smoking is unconvincing, especially when we compare our legal treatment of smoking by underage youth to our legal treatment of alcohol consumption by youth. Both have short and long-term consequences, but only one is illegal for underage purchasers: alcohol. It is perfectly legal for teens (or younger children) to smoke; they just can’t buy the product themselves. Clearly we are serious about alcohol. When it comes to cigarettes, however, mixed messages suit our tax revenue purposes best.
The movie ticket tax, another item in the state’s proposed budget, may help to illustrate the true purpose of a cigarette tax. Both are consumed in fairly large quantities by large numbers of teens. No one is suggesting, however, that a movie ticket tax is a means of cutting down on teenage eyestrain, exposure to sex and violence in films, fat-laden popcorn consumption, or other hazards associated with a night at the cinema. Everyone understands that a movie ticket tax is a revenue policy, not a teenage health policy.
In terms of cigarette taxes, North Carolina budget makers are playing a revenue game with cigarette consumers. The cigarette tax will be passed, and raised over time, as long as cigarette tax revenues continue to increase, regardless of the age of cigarette smokers. If cigarette tax revenues fall off, we can be sure that the state will declare the tax “high enough,” or the policy “successful enough,” rather than risk a real reduction in the number of smokers or tax dollars.
As an alternative, lawmakers could always make the “Sleeper” argument, and declare that cigarettes, high fat foods, and all the other things we once thought were bad for us are good for us after all. For the tax collector, it works either way.