Bayou Business Review, 4/20/98 p. 26
I am trying to teach my children not to smoke. The Senate is trying to help. Senator John McCain (R-AZ) and the Senate Committee he chairs, the Committee on Commerce, Science, and Transportation, approved the "National Tobacco Policy and Youth Smoking Reduction Act" by a 19 to 1 vote. The bill represents a comprehensive federal effort to prevent kids from smoking. It increases the federal tax from its current rate of 24 cents per pack to 65 cents in 1999 and to $1.10 per pack in 2004. I can think of no responsible adult who would want children to smoke. However, it seems to me that the Senate Bill is not the way to keep kids from smoking.
Already, with state and federal taxes make up about 30 percent of the price of cigarettes. The tax increase in this bill would boost that percent to about 55 percent of the price. Cigarette prices would be about $3 per pack with $1.65 per pack going to pay state and federal taxes. What kind of effect can we expect from this tax increase?
People are clever, and someone will find a way to avoid paying this tax. Cigarettes bound for overseas (and untaxed) may get diverted and show up for sale here. We have been unable to keep marijuana from making its way to our shores and our streets. I would not be surprised if tobacco plants became common in some people’s gardens. With legal, tax-paid cigarettes priced at $3 per pack, the profit will be there.
Over the past thirty years or so, there has been evidence that the differences in state cigarette taxes have led to organized crime getting into the business of smuggling cigarettes across state lines. Not only has there been organized smuggling, but many smokers who live near state borders will pick up a couple of cartons of cigarettes when they happen to travel to neighboring state with lower cigarette taxes.
Think about this. Washington, D.C. has a 65 cents per pack tax on cigarettes, while cigarettes in Fairfax, Virginia have only about a tax of 13 cents. That amounts to a $5.20 difference in the price of a carton of cigarettes between these two cities that are connected by a $2.00 subway ride. How many cartons of cigarettes will fit into a duffle bag? Better yet, how many cartons can fit into a van?
With it profitable to smuggle cigarettes across state lines for a 52-cent price difference, it would be profitable to smuggle them across national boundaries for $1.65 price difference. We will be about as successful in stopping cigarette smuggling as we have been in stopping the smuggling of marijuana.
To make matters worse, kids who end up buying smuggled cigarettes will be buying from the same folks who are now selling marijuana and crack. With high cigarette prices, the difference between cigarette prices and marijuana and crack prices will not be much. For a little more, they will be able to buy these other drugs.
The whole problem with this bill is that it is really misdirected. Is it the government’s responsibility to make kids behave? Or is this the responsibility of parents? Even if one thinks that the government should do something here, how can it do what parents cannot or will not do?
While price increases through tax increases will have some effect on youth smoking, it will have much less effect than either peer or parental pressure. Parents teach children by their own example. Parents who smoke are more likely to have children who smoke.
My oldest child is in the second grade, so I really do not know how I am doing at teaching my children not to smoke, but I think I am making headway. My first grader has made a no-smoking sign that he has taped to the inside of my office door.