Will Prop 10 Matter?
November 16, 1998
Some analysts wonder how much good California's recently passed Proposition 10 will actually accomplish. Cigarettes will be taxed an extra 50 cents a pack starting next year, bringing the total tax bill to 87 cents.
Raising taxes typically doesn't lower the number of smokers -- it just makes them more creative. For example,
- When Massachusetts raised cigarette taxes a few years ago, smokers simply went to neighboring New Hampshire.
- While smoking rates were the same in the two states at 22 percent of adults, sales in New Hampshire were double those in Massachusetts.
- An Associated Press story last week reported vendors in Nevada, which has a 35 cents per pack tax, and Arizona, with a tax of 58 cents a pack, were counting on more business thanks to Prop. 10.
Analysts also note that California has been down this road before. Voters passed Prop. 99 a decade ago, which boosted taxes per pack from 10 cents to 35 cents, even as federal taxes have climbed to 24 cents. Yet underage smoking has gone up every year since 1990.
Source: Editorial, "Crock 10," Investor's Business Daily, November 16, 1998.
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