Smoker's Cough

 

 

 

"Smoke, smoke, smoke that cigarette
Puff, puff, puff and if you smoke yourself to death
Tell St. Peter at the Golden Gate
That you hate to make him wait
But you just gotta have another cigarette"

 

Smoke, Smoke, Smoke that Cigarette

Merle Travis and Tex Williams

 

 

Wow! I heard something on the radio when I was out cutting the grass that blew my mind! It seems that merchants in the border towns in North Dakota have been running out of cigarettes since Minnesota's new tobacco tax became law! I don't understand this. The good people of Minnesota were suppose to "suck it up" and pay the extra $1.60/pack to help out the cause. Good citizens would have done that - I just can't believe some Minnesotans would go across the border to another state to buy smokes at a cheaper price.

 

When our good DFL legislators came up with this scheme, it made good sense to me. Jack the price of smoke way up. The result would be people would not want to pay that much and quit or the ones who continued would throw scads of extra money into the state coffers. Some idiot asked "What if the price got so high, that nobody bought cigarettes in Minnesota anymore?" What a Nay-Sayer! Of course people are going to continue to pay the extra $1.60/pack.

 

Here is the bottom line. It is Econ 101. When the price gets too high for a product, different consumer outcomes are likely to occur. For example:

• Outcome 1 - Quit smoking all together (no tobacco tax is collected)
• Outcome 2 - Continue to smoke, but buy cigarettes from a lower tax state (no Minnesota tax is collected)
• Outcome 3 - Continue to smoke, but buy cigarettes on the "black market" (no tobacco tax is collected)
• Outcome 4 - Continue to smoke and buy cigarettes in Minnesota (all tobacco tax is collected)

There is a delicious irony to this tax increase. People don't have to smoke. They don't have to buy product in Minnesota. For every pack not purchased in Minnesota, due either to people quitting or buying product elsewhere, is a loss in state revenue of $3.33. The increase of $1.60 is only part of the total tax - counting everything, the state tax is $3.33.
 
True confessions. I am a former smoker. When asked the smartest thing I ever did in my life, it was marrying my wife. The dumbest thing I ever did was start to smoke when I was in the Navy. Smoking was almost encouraged back then. "Take a smoke break", 'Have a coke and smoke", were the orders given when a break from duty was given. Smokes were sold everywhere on base and the price overseas was 17 cents a pack. Still, it was my decision to start smoking - and it took my until I was 31 to quit.

I tell that story because one of the things that helped me quit when I did was the price of a pack of smokes. My wife was pregnant with our first child and I did not want to set a bad example. In addition, every dollar was important, and to pay 45 or 50 cents for a pack of smokes could not be justified. So I quit. Today with a pack of smokes costing over $5, I could quit in a New York minute.

As predicted, this tax increase is starting to backfire. It simply won't work. Only a small fraction of smokers will continue to buy cigarettes at the new price in Minnesota. When the revenue numbers fall far short of predictions, many will say "I told you so!" I might be one of them.