Saturday, February 17, 2007

Taxing tabacco

Governments like to tax things that are inelastic in demand. That tends to give them a stable tax base and a very predictable revenue stream. However, other public policies can get in the way of those revenue streams. Banning smoking in most places (Arizona's ban starts in mid-May) is one of those.

Because of quitters like Henkel, Minnesota's tobacco tax revenue is expected to go into a gradual slide later this year -- a drop that may grow even steeper with the expected passage of a statewide smoking ban...

Similarly, the federal cigarette tax has been bringing in less money each year since 2002. The amount dropped from $8.1 billion in 2002 to $7.7 billion in 2005...

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