O’Malley learns that taxes cause smuggling
Last November, Maryland Governor O’Malley snuck up behind Marylanders and stabbed us in the back with a massive tax hike. Part of that tax hike was a doubling of the cigarette tax. At the time I wrote;
A pack of cigarettes in Maryland is already nearly $5/pack. Jack it up to $6, you fools – most Marylanders only need to drive a few miles in almost any direction and buy them cheaper. Raising the price $10/carton more makes it much more attractive to buy them out of State. How much revenue ya got then, chump?
Well, now we get our answer a mere nine months later as reported in the Wall Street Journal;
Politicians in Annapolis are scratching their heads wondering what happened to all those chain smokers who were supposed to help balance Maryland’s budget. Last year the legislature doubled the cigarette tax to $2 a pack to pay for expanded health-care coverage. Eight months later, cigarette sales have plunged 25% and the state is in fiscal distress again.
A few pols are pretending to be happy that 30 million fewer cigarette packs have been bought in the state so far this year. As House Majority Leader Kumar Barve put it, fewer people smoking is “a good thing.” Yes, except that Maryland may be losing retail sales more than smokers. Residents of Maryland’s Washington suburbs can shop in nearby Virginia, where the tax is only 30 cents a pack, and save at least $15 per carton.
The Maryland pols are so afraid this is true that they’ve made it a crime for residents to carry two packs of cigarettes that weren’t purchased in the state. In other words, the state says it’s legal to smoke, so long as you use cigarettes that the government can tax and thus become a financial partner in your bad habit. But if you dare to buy smokes across state lines, you can be fined.
Um, didn’t I warn you goofballs? Hell, you can even buy cigarettes on line, pay for shipping and it’s still cheaper than cigarettes in Maryland. Not that I do it – I don’t have to. But smuggling is a fact of life that politicians don’t understand. Whenever you make something difficult or expensive to buy, people will always find a way around it. It’s human nature.
As soon as Maryland’s tax went up, the border with Pennsylvania was dotted with new cigarette shops – the same thing that happened when New York raised it’s cigarette taxes. I was in Delaware a few weeks ago and it’s the same there.
Too bad O’Malley can’t find a way to tax the American spirit.
Crossposted at This Ain’t Hell.