Cigarette Taxes Create More Failure? NY and Chicago Suffer From Liberalism

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It’s common sense, really.  If you tax something highly, human nature dictates that people will go out of their way to avoid the tax.  Liberals, however, seems to have missed that, because they continue to tax and tax.  Then, they are completely shocked and surprised when people do what they have always done.  Hot Air has the latest…

First, my own home stomping grounds of New York, which has been seeking a way to stave off total fiscal collapse by jacking up one of the highest tobacco tax rates in the nation. How’s that working out for ya?

ALBANY – Chronic cigarette-tax evasion continues to cost New York State at least $1.7 billion a year in tax revenue and 6,700 jobs, according to a new report from the New York Association of Convenience Stores (NYACS).

Commissioned by NYACS, the economic study by John Dunham & Associates determined that in 2011, one of every two packs of cigarettes consumed in New York State escapes collection of New York State taxes. “This is further proof that New York, which has the highest cigarette excise tax in the nation, continues to suffer the corrosive economic and fiscal effects of the worst cigarette tax evasion in the nation,” said NYACS President James Calvin in a press release.

Their study finds that nearly half of the packs of smokes purchased in New York were “from other states, Indian reservations, duty-free shops, and military bases.” And that doesn’t take into account the number of smokers who are choosing to do their shopping with black market bootleggers who are increasingly prevalent in sections of the state which are further from the border.

Lol, this has been reported for years.  I think I did my first post on cigarette taxes in NY in 2009.  But, in response to their failure, the liberals keep going and going -reality be damned.

Apparently, Chicago is also seeing the problem…

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But that’s just New York. We’re kind of weird out here anyway, right? So maybe this case is just an outlier. I’m sure things are working out much better in Chicago, where Illinois is quickly moving to catch New York in the smoke tax category. The money surely must be rolling in by now.

CHICAGO (CBS) – Cook County investigators have been raiding stores across the county that have been breaking the law, and ripping off taxpayers of millions of dollars, by selling cigarettes without proper taxes…

About 800 raids take place each month.

“Roughly a quarter of them result in confiscations,” Cook County Board President Toni Preckwinkle said.

“In the last fiscal year, it was a loss of $6 million,” she added. “$6 million would make a great deal of difference to our healthcare system, or to our criminal justice system.”

Chicago has at least found a way to make up some of the loss, giving credit where credit is due. To date they have managed to issue more than $1.3M in fines, largely against small retail outlets who sell cigarettes. So they’ve got that going for them I guess. And hey… they’re creating jobs, too.

Lol, when will they ever learn?  If you want something to go away, or go underground, tax it.  In pretty much every state where a cigarette tax has been pushed to the limit, revenues have not met projections, and in some cases, they have dropped in total.

The solution is really simple.  If the government reduces the tax, people will no longer have the incentive to avoid it, and revenues will increase.  But, the liberals will never see that.  It’s reality, and that really doesn’t “compute” to the liberal mind, so the taxes will continue to grow.  More people will be made criminals, and will not only revenues decrease, but the liberals then expend a freakton of resources on enforcing the taxes, to the detriment of other activities in the public interest,

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High Cigarette Taxes Backfire Once Again: Illinois Latest State to Collide with Reality

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Who would have thought that higher cigarette taxes would reduce tax revenue?  Well, anyone with a brain would have predictecd that, so I guess that’s why regressives went and did it anyway.  Hot Air has the details…

With some time having passed to let the cash cow fatten, we should check back in and see what the fine citizens of the Land of Lincoln are doing with their new found largesse. I do hope they’re not all getting fat and lazy now that all of the state’s fiscal problems have been solved. Ahhh… happy days.

When Illinois Gov. Pat Quinn signed a bill adding another dollar a pack to the state’s cigarette tax, law enforcement leaders knew they had their hands full.

John Chambers, head investigator for the Illinois Department of Revenue, says cigarette smuggling now rivals illegal drug smuggling, and street gangs are getting involved.

“Keep in mind this is very similar to drug activity, smuggling drugs, and there could be concealed compartments, false floors in the bed of a truck, much like drugs, all packed with cigarettes,” Chambers said.

In Cook County, the tax on smokes is now $4.66 a pack. In Indiana it’s $0.995. Missouri checks in at $0.17. Who could possibly have seen this coming?

In a recent study, University of Illinois at Chicago professor David Merriman found 75 percent of cigarettes in Chicago didn’t have the proper tax stamps. He says the most recent increase will likely have a big impact along state lines.

“For the ordinary everyday smoker, many of them have already found ways to avoid the tax. I think it’s going to be a much bigger issue in areas where the state border makes it a big difference,” Merriman said.

A clerk at a tobacco shop in Hammond, Ind., less than a mile from the state line, says business has doubled since the latest increase began at the end of June.

How many times does this have to happen before the regressives see that it doesn’t work?  This humble blogger has been covering this type of thing since 2009.  Like this…

Native Americans are exempt from cig taxes.  Guess what?  People go to them and buy their smokes!  That seems simple enough, but as usual, there is more here.

The tax hike, the first in six years, is expected to earn the state between $200 million and $300 million. A pack of premium cigarettes in New York City now costs $7 or $8; prices would rise to above $9. Opponents of the tax increase argue that higher prices would drive smokers to seek ways to evade the law and purchase cheaper cigarettes from smugglers or in neighboring states, blunting potential revenue gains for the state. “It’s a black market gold mine,” a senior fellow at the Manhattan Institute, E.J. McMahon, said of the proposed tax. “You have to invest resources in scores of attorneys, cops, and auditors, who are all part of the tax enforcement you need.”

“By raising cigarette taxes you help fund the mob,” the president of Americans for Tax Reform, Grover Norquist, said. “Cigarettes are easier than liquor, as they’re lighter and smaller per container. It leads to smuggling and smuggling is done best by organized crime.”

And there’s even more…

Mr. Norquist said New York’s proximity to states with lower taxes would lead smokers to cross the border to buy cigarettes, reducing tax revenue below state projections.

New York has seen significant increases in its cigarette tax rates before. In 2002, New York City’s cigarette tax increased to $1.50 from $0.08, as part of an initiative by Mayor Bloomberg to encourage smokers to give up the habit. Although the taxes produced an increase in city and state revenue, some smokers took illegal measures to avoid paying the new tax, costing taxpayers tens of millions of dollars.

A 2007 report by the Independent Budget Office, a nonpartisan city agency that analyzes the city’s finances, found that 27% of city smokers and 34% of upstate smokers sometimes bought “under-taxed” cigarettes in 2006. These smokers avoided the tax by buying cigarettes from other states, ordering cigarettes over the Internet, and purchasing cigarettes at Indian reservations. The city lost an estimated $40 million in tax revenue as a result of cigarette tax evasion in 2006, according to the report.

“It encourages people not to be ripped off,” the founder of Citizens Lobbying Against Smoker Harassment, Audrey Silk, said of cigarette taxes. “Any consumer who’s so abused will look for ways to avoid it, making outlaws out of normally law-abiding citizens.”

 And here…

Apparently, raising taxes on tobacco products is falling out of favor with state governments…

According to Patrick Gleason, director of state affairs for the conservative Americans for Tax Reform, tobacco has not been the revenue boon states that have increased cigarette taxes had hoped.

“The lack of interest in raising tobacco taxes this year can be attributed to the fact that tobacco taxes have indisputably proven to be a dubious and declining source of revenue,” Gleason told TheDC. “From 2003-2007, 16 of 59 tobacco tax hikes fell short of revenue projections.”

Here in Washington D.C., for example, the city’s 2009 $0.50 tax hike resulted in a severe drop in expected revenue. In 2010, the District of Columbia’s chief financial officer Natwar Gandhi reported to the mayor that the projected government intake was over $15 million below what they had initially estimated.

Gleason pointed out that for revenue, cigarette taxes are proving to be a loser.

“New Jersey raised its cigarette tax by 17.5 cents in 2007, yielding $52 million less than Garden State lawmakers anticipated and $22 million less than was generated prior to that tax hike,” Gleason told TheDC. “Over the past decade it has become clear that tobacco taxes are an unreliable source of revenue and one in which no budget should depend on.”

And here…

  For the latest, NY State is lamenting the fact that their cigarette tax revenue is far below expectations…

The Empire State is struggling to bring in additional tax revenue it projected it would gain from efforts to stop smokers from buying untaxed  cigarettes on Indian Reservations, reports the New York Post:

The state’s tax collectors were recently calling around to convenience-store owners, wondering what was up. The $130 million in extra tax that Albany was expecting from a change in the law about cigarette sales on Indian reservations wasn’t happening.

A memo sent to members of the New York Association of Convenience Stores from the group’s president, Jim Calvin — a copy of which I have on my desk — said, “I got a call from Gov. Cuomo’s budget office yesterday. In examining cigarette tax receipts so far this fiscal year (April 1 to March 31) it looks like they will fall considerably short of their projection in new revenues. . . .”

The state had hoped to get the extra dough by enforcing a new law that made it illegal for licensed cigarette wholesalers in the state to sell untaxed name-brand cigarettes like Newport and Marlboro to Indian reservations.

Seriously, how many more times does this have to happen before the regressives get it?  They say that the definition of insanity is doing the same thing again and again, and expecting a different result.  Apparently, regressives are the craziest folks on Earth, as they are the energizer bunnies of taxation.   Unfortunately, they are continuing to raise taxes of all sorts, and it’s only going to hurt people, or turn them into criminals.

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