#748 Inhale Income

So I was talking to a friend the other day who smokes. He mentioned in passing the cost of a pack of cigarettes. Aha, I thought, there’s a vast conspiracy afoot. Why does the cost of a pack of cigarettes seem so completely indexed to the cost of a gallon of gasoline?
Gas and Cigarettes, next to booze the two most heavily taxed commodities.
Folks in New York are facing a different pack of trouble. New York has thought, hey, we need more revenue for healthcare, so let’s target the unhealthy smokers again.
By the way, a recent study not funded by the tobacco industry indicated that the much-ballyhooed statistics that smokers add more to health care costs ignored a vital fact.
Smokers die a lot sooner.
And, in fact, cost less healthwise, because they don’t make it out to the eldercare years when Alzheimer’s, and the gradual breakdown of the body with kidney disease, diabetes and arthritis adds staggering costs.
But New York State is just focusing on short term revenue and proposing to tax cigarettes an additional $1.25 to $2.75 a pack. A New York City resident already pays $1.50 a pack city tax and 39 cents federal tax so in that smoky burg the average cost of cigarettes will likely be 9 dollars a pack.
At that price New York will be smoke free in a week.
Then where will all their revenue come from?
The truth is, the strategy will backfire quicker than an investment in a Middle Eastern war.
Can you say black market?
Historically, any time a product that is used by the masses has become price prohibitive, organized crime fires up an alternative. From moonshine to meth, bad habits are what keep the poor folk from rising up out of their economic chains.
If one of their habits gets to costing way too much, they are more than willing to become a criminal to smuggle it or have it smuggled to them.
And tax revenues will fall, the black market will grow, and disrespect for the law will become an even more dangerous and insidious habit.
America, ya gotta love it.