#PABudget: Why Aren’t We Talking About a Statewide Cigarette Tax Increase?

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With the local cigarette tax for Philly schools passing out of committee, it’s a good time to zoom out and ask why we haven’t been talking about raising the cigarette tax all across the state to fill the Great Republican Budget Hole of 2014.

Here’s the most recent map of state cigarette tax rates I could find, from the Tax Foundation. As you can see, Pennsylvania doesn’t have particularly high state taxes on cigarettes and we could stand to raise it another $2.00.

Now, there’s a good conversation to be had here about whether we’re aiming for the revenue-maximizing tax rate (the sweet spot where not too many people quit or buy out of state/on the black market) or the public health-maximizing tax rate (where lots of people quit and we get less and less money over time.) But I don’t think an extra $2 a pack statewide would overshoot the revenue-maximizing rate.

This entry was posted in Budget, Economy, Health, Issues.

11 Responses to #PABudget: Why Aren’t We Talking About a Statewide Cigarette Tax Increase?

  1. Albert Brooks says:

    Why do you think raising the tax $2.00, which is more than doubling the rate now and would make the state the 2nd highest in the country, would not overshoot the revenue maximizing rate? What do you base that on?

    I quit when the price hit a dollar a pack so it really doesn’t effect me but I’m curious where you got your reasoning.

    • Jon Geeting says:

      Just my opinion – most of the state is landlocked so not much border bleed, and western PA has higher smoking rates. Addicts aren’t as price-sensitive. It’d probably have to get up to NYC price levels – like $12 a pack – before we started to see a serious dent. Could be wrong of course.

  2. Tim Potts says:

    Is anyone other than the very poor going to buy cigarettes in Philadelphia after this? This is an irresistible invitation for a black market. Maybe next year they’ll raise the gas tax $2 a gallon in Philly to pay for enforcement of the cigarette tax.

  3. Jon Geeting says:

    Do you smoke Tim?

    • Sean Kitchen says:

      I’m not getting this whole entire “black market” talk when it comes to taxing cigarettes. I say tax them out of existence.

      • Jon Geeting says:

        The Internet, tho.

        • Sean Kitchen says:

          That “black market talk” is just as bad as people saying they’ll drive outside the city or go over to new jersey to get their cigarettes. Yeah, because taking a half hour out of your day and going to the suburbs and paying bridge tolls is really logical.

          • Jon Geeting says:

            People order cigarettes over the Internet. It’s not like this is a frictionless market where we’ll get perfect border bleed, but it’d be stupid to think some people won’t take advantage of arbitrage over the Internet (or quit, or drive to New Jersey if it’s close).

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  5. Richard Plavo says:

    What about eliminating tax loop-holes and eliminating that 1% gift of state sales tax to the big stores? that 1% they don’t have to remit to the state treasury!