Florida sees decline in cigarette sales after tax hike
The Florida legislature passed a $1 dollar tax increase on cigarettes this year, on top of the increase passed by Congress with SCHIP expansion, and sales have taken a hit:
Cigarette sales have fallen sharply across Florida since a $1-a-pack tax increase took effect July 1, plunging nearly 50 percent in some counties.On one hand, supporters of this policy tell us that they want to increase revenues for various programs or to fill budget gap. In the next breath they tell us that it will discourage smoking, especially among youth (who are least effected by these taxes). They talk out of both sides of their mouth.Statewide, cigarette sales that regularly topped 100 million packs per month dropped to 73 million packs the month the tax became law. Since then, sales have inched back to around 78 million packs but remain well below prior levels.
[...]
The most dramatic decline in cigarette sales was in Miami-Dade County. In June, the month before the higher tax took effect, retailers and convenience stores sold 8.9 million packs; a month later, 4.4 million. Sales since rose to 6 million packs in September, the latest month for which county-by-county information is available.Cigarettes sales in Broward and Palm Beach counties both saw a similar initial decline - evidence of sticker shock among smokers - and then recovered a bit. Broward's monthly clip of about 6.5 million packs now is below 6 million packs a month. Palm Beach County sales dropped from around 5.5 million packs to 4 million.
No doubt State Rep. Ron Stephens (R-Taxville) will take on his annual crusade to increase Georgia's tobacco tax (one of five tax increases proposed by Republican legislators last year). However, he and others in the Georgia General Assembly should take notice of what's going on in Florida. This is bad public policy because it tends to effect the poor.
H/T: Tax Foundation
Comments
When you say poor, are you talking about people who don't pay any income tax, but still get a "refund"?
If this tax was implemented in Georgia AND the additional revenue was completely applied to income tax reduction, I'd be all for it. Of course that isn't ever going to happen. If people quit smoking and revenue actually decreased, we'd get a break on our ObamaCare taxes.
Posted by: DonnieChaffin | November 17, 2009 08:15 PM
I wonder if a Cigarette black market has developed?
Posted by: Joshua Patterson | November 17, 2009 09:10 PM
Joshua it is already in place in the Stockbridge area. A nice little old lady handles the business out of her house.
Pete
Posted by: Pete Cook | November 17, 2009 09:52 PM
We've been saying this for years. These politicians really do speak out of both sides of their mouths on this issue. First, it's the "we need more revenue" bit, but then when you hit them with the historical data (which Florida now neatly fits into), they pull out the whole "we're trying to help people quit and it's for the kids". So, the original justification just goes out the window.
And yes, black market sales always increase after a tax hike on cigs. Also, I'm sure every county in Georgia and Alabama that borders Florida has seen an explosive growth rate in cigarette sales as well.
Usually sales volume never fully recovers and even with the added tax, the predicted added revenue never materializes...Typical.
Posted by: Marshall | November 17, 2009 10:15 PM
Whenever the government wants something they always pull the kid card and say it’s for the kids. That is bull the government is working on their long rang plan. In the next few years it will be coming out about the health benefits of smoking and they will jack up the prices even more. People will always smoke it is a choice of our freedom and not the government’s affair if people smoke. It will get to a point like it was when they tried to out law whiskey, beer, and all. It did not work then and it will not work now. So to the government deal with it this is the land of the free.
Dark Knight
Posted by: Dark Knight | November 17, 2009 11:18 PM