July 02, 2008

Tobacco Tax Hike in Massachusetts: Ouch, But...

I don't have many bad habits. In fact, I think I have only one really bad one. I don't drink, I don't gamble, I don't cheat on my partner, I eat a relatively healthy diet. Arguably, my one bad habit is one of the worst, though, for my health. I'm a smoker. There, I've said it. I am a member of one of the most reviled groups in America. I'm a smoking non-theist social liberal. It might be wise to invest heavily in Kevlar now that the word is out.

Let me add two more adjectives to this description. First, I am a conscientious smoker. I make it a point to avoid inflicting my bad habit on bystanders. If I'm walking with a group of people, for example, I'll position myself so that my smoke blows away from them. If I'm waiting at a bus stop or otherwise near others I'll move far enough away in a direction so that I don't pass second-hand smoke toward them. Second, I am a poor smoker. I'm a graduate student. The two previous statements are redundant.

I knew that Massachusetts was about to hike the taxes on cigarettes but I hadn't realized it was going into effect yesterday. In the early morning I stopped off at the Mobil station at Main and Park — one of perhaps five places in town that carry my brand — and bought a pack for the same price I've been paying every day for the year since I've been living here, $5.96. That was already expensive; apparently I smoke really, really good cigarettes. On the way home from the lab just after 6:00 PM, I decided to save myself the early morning stop. Traffic is bad in the morning and it can be hard to turn out of the parking lot in the direction I want to go, so I figured I'd save myself one small hassle since this morning will be a busy one. The clerks at the Mobil station know what I want without my asking for it since all I ever buy there are cigarettes. They all know my brand and so the guy at the counter retrieved a pack for me without my asking. Then he rang it up.

The price had jumped to $7.32! My pain was made audible with a heartfelt "ouch." It isn't often that the price of anything I buy goes up by 23% in less than 24 hours.

Massachusetts is doing this to generate tax revenue. It's part of a larger package to boost the budget, and according to the Worcester Telegram and Gazette the hike will generate $680,000 per day for the state. Whether or not one agrees with this sort of approach for purely political reasons, it's worthwhile to ask whether the measure will do what lawmakers expect it to do.

Massachusetts is a small state, geographically speaking. I live nearly dead-center on the map but I'm less than an hour's drive from both the Connecticut and New Hampshire borders. No matter where in the state people are, they're not far from a neighboring state. With the new tax hike, all of those states will have lower prices per pack than does Massachusetts. An average pack here now costs $6.41; that same pack costs $4.19 in New Hampshire, $5.50 in Vermont and $5.63 in Connecticut. More smokers will simply cross a state line to purchase their tobacco to avoid the substantial increase in price than did before. I have no idea whether lawmakers took this into account when they decided that the increase was a good idea, but some of the effect of this increase is bound to be a windfall for neighboring states, not for Massachusetts.

Those who don't feel like crossing a border and plan ahead might also be expected to start using, or to increase their current use, of online sources. Just like the high cost of prescription drugs helps to feed a black market online, so will the increase in the cost of tobacco. A quick search yield a number of online discounters yields tens of thousands of hits on sites with names like Mailordercigarettes.biz, Ourcigarettes.net and Cheap-cig.com. Is it legal? I don't know, and I'm not endorsing buying cigarettes online. The point is that it's possible and if there are laws against utilizing such websites they would be extremely difficult to enforce. Stepping up any current enforcement would require more tax dollars to pay for the effort, defeating the whole purpose of the tax hike in the first place. Prohibition didn't stop people from drinking; hiking prices won't stop them from smoking. It will simply provide an impetus for more people than ever to circumvent laws and become more creative about it.

A year from now, we'll hear about statistics that show the the amount of tobacco being purchased in Massachusetts has decreased. The emphasis will be placed largely on the "decreased," but in reality a lot of it should be placed on the "in Massachusetts" bit. In the end, more money will simply flow out of the state and the tax increase won't generate the revenues or prompt as many people to quit the habit as the state government thinks it will.

In purely practical terms, if the aim of this tax hike is to generate revenues then it was a bad idea. You'd have to increase taxes on something that can't be easily purchased elsewhere for that to work. A gasoline, income or sales tax increase would have been far more useful. If the aim is to get people to quit smoking it won't be very effective, either, for the reasons I've noted above. In that regard, it will impact mainly those who aren't old enough to drive out of state or to hold a credit card in their own name — mostly underage smokers. That's a fine thing, but Massachusetts already enjoys a low proportion of teen smokers. Overall, that impact will be negligible.

When all is said and done, this particular tax hike isn't going to accomplish much of anything at all.

While the tobacco tax was pushed by Tobacco Free Mass and other anti-smoking groups, the Legislature did not direct any of the new cigarette tax revenue to programs to help people quit smoking...


...Joe said lately he had taken to buying loose tobacco and rolling his own cigarettes because the manufactured ones had already become so expensive.

"I'm looking for anything to make it cheaper, even if I have to grow my own," he said...

Chantelle Flagg, an employee at Mike's Mini-Mart, a convenience store a few miles from the New Hampshire border in Winchendon, said customers have been stocking up on butts recently in anticipation of the tax hike. Others say they'll cross the border for cheaper deals.

"I've had a lot of customers tell me they're going to New Hampshire," Ms. Flagg said.


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