October 18, 2005

Kentucky Smokers Can't Take the Heat

Yet more evidence that cigarette tax hikes aren't good revenue raisers. Kentucky's Lexington Courier Journal reports that smokers bought 145 million packs of cancer sticks in the past three months, down from 161 million over the same period last year. [Boy, that still sounds like a lot of cigs for three months, though....]
An economist in the governor's office admitted that they hadn't forecast such a big drop in taxable consumption:
The tax increase should have produced about a 4 percent decline in sales, he said, "and we've got between a 10 and 20 percent decrease in consumer behavior, and that's very surprising."

Surprising in a "gosh, where's the WMD?" way, maybe. But when this cig tax hike was enacted in combination with a variety of cuts in the income and corporate taxes, lawmakers were obviously counting on new cigarette tax money to offset cuts in more progressive taxes. Cutting the income tax and replacing the revenue loss with a "tax increase" that you don't expect to materialize amounts to an opportunistic shell game by the anti-tax crowd.

Undaunted, Governor Ernie Fletcher is now saying that he wants to tack on another 10 cent cig tax. Oh, and he wants to use the money to add a new income tax credit for teachers.
That would make the proposal "revenue neutral," Fletcher said.

At least he's consistent...